SLA Newsletter 5: SCOTUS hears student loan forgiveness

Hello,

Last week there was a Supreme Court hearing on student loan forgiveness. This day was like the Superbowl for a student loan nerd like me. So bear with me on this longer newsletter.

For those unfamiliar, there are two lawsuits which are currently blocking student loan forgiveness:

1.) Department of Education vs Brown

2.) President Biden vs Nebraska

In both of these lawsuits SCOTUS is looking to rule if either of these cases has standing. If SCOTUS rules either case has standing, student loan forgiveness would be overturned. Standing, is a condition that a party seeking a legal remedy must show they have, by demonstrating to the court sufficient connection to and harm from the law or action challenged to support that party's participation in the case. It became clear the second case is the stronger of the two.

GEN. Elizabeth B. Prelogar was the attorney who represented the Department of Education and President Biden. She had a very strong showing and is a large reason why several members of SCOTUS are now questioning standing in the case. Most experts predicted, with a 6-3 conservative majority in the Court, forgiveness would be blocked.

However, Justices Barrett and Kavanaugh questioned the standing in both of these cases. The remaining conservative justices (Alito, Gorsuch, Thomas, Roberts) seemed to clearly oppose the idea of forgiveness. For forgiveness to be blocked there needs to be at least a majority of 5-4. After the hearings, experts say the ruling is going to be close. SCOTUS decision will likely be made in June.

During the hearings, HEA or the Higher Education Act of 1965 was brought up when they were discussing waivers. This could be the another method they use to forgive student debt. President Biden has employed the HEROES act for the student loan moratorium and student loan forgiveness.

HEA would require negotiated rulemaking which is a lengthly process (at least a year) to rescind old regulations and adopt new ones. HEA gives the administration another strategy if forgiveness doesn't go through under the HEROES act.

My summary of the case is I still believe student loan forgiveness will be blocked.

To add another thing in the mix, SoFi just filed a lawsuit to end the pause. With the low likelihood student loan forgiveness is successful, SoFi believes the Biden Admin is going to continue to pause payments. The student loan pause has been great for borrowers and hard on private lenders like SoFi. Some lenders like Commonbond have even exited the student loan business during the pause. This lawsuit might be a catalyst that causes payments to begin this year. But, the jury is still out. I'll cover more on this story in our next newsletter.

You're probably wondering what does all of this legal stuff mean to me?

The 10-20k doesn't really change things for you but an additional extension to the loan moratorium would. For now, plan that payments restart in September this year.

And one more thing, help us spread the word about our newsletter so we can continue to keep you informed and save borrowers money on their student loans.

Thanks for what you do and let me know if you have any questions!

-Andrew