Will Biden’s One-Time Student Loan Forgiveness Happen?

Q: Does President Biden have the legal authority to forgive student loans?

The Biden administration argues it has the legal authority to forgive most federal student loans under the HEROES Act if there’s a national emergency. The administration says the Covid-19 pandemic qualifies as a national emergency, but at least one federal judge has declared Biden’s one-time debt relief plan to be unlawful. The Supreme Court may ultimately answer the question of whether Biden has the authority to forgive student loans.

Q: What will Congress do if Biden’s debt relief plan is ruled unlawful?

Members of the U.S. House of Representatives and U.S. Senate may introduce a student loan forgiveness bill in Congress if Biden’s debt relief plan dies in court. A bill needs to pass both chambers of Congress before the president can sign it into law.

Will Biden’s One-Time Student Loan Forgiveness Happen?

Sulaiman Abdur-RahmanUpdated December 2, 2022

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

As of December 2022, it’s impossible to say whether President Joe Biden’s one-time student loan forgiveness will happen. Amid legal challenges and lower court rulings blocking the program, the Biden administration is extending the federal student loan payment pause as it waits for the Supreme Court to decide whether it was acting within its authority in canceling student debt. Biden announced in August that his administration would provide up to $20K in debt relief for millions of qualifying federal student loan borrowers, but a Texas federal judge vacated the program and declared it unlawful in November. The only way Biden’s student loan forgiveness plan can move forward at this point is if the administration wins on appeal. The administration is battling multiple lawsuits challenging the legality of the program. The U.S. Department of Education, meanwhile, has announced an open-ended extension to the student loan payment pause. Federal student loan payments may resume as late as 60 days after June 30, 2023. It is now up to the U.S. Supreme Court whether Biden’s one-time student loan forgiveness happens. We will stay on top of what’s going on and will continually update this story as it develops. Read more about the controversy below:

Why Is Biden’s Forgiveness Plan Facing Setbacks?

The central dispute with the Biden administration’s one-time forgiveness plan is that it is based on its interpretation of a 2003 federal law known as the HEROES Act as it relates to the Covid-19 pandemic. The administration argues the pandemic is a national emergency that gives the administration the power to enact broad student loan forgiveness under the Higher Education Relief Opportunities for Students Act. The HEROES Act includes a provision that says the U.S. Secretary of Education — an appointee of the president — “may waive or modify any statutory or regulatory provision” of federal student loan programs if the secretary deems it “necessary in connection with a war or other military operation or national emergency.” Multiple plaintiffs, including the states of Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina, have filed federal lawsuits alleging Biden’s one-time forgiveness plan is unlawful and not authorized by Congress.The six states lost the first round of their suit, but while they appeal, the St. Louis-based U.S. Circuit Court issued an injunction, stopping the Department of Education from processing the applications for forgiveness that it had received.Meanwhile, in a case tried in Texas, U.S. District Judge Mark T. Pittman decided against the Biden plan, declaring it “unlawful” and outside the scope of the HEROES Act. Pittman also vacated the program, so the Biden administration was required to halt accepting one-time debt relief applications. Most recently, the Supreme Court announced on Dec. 1 that it would fast-track the appeal related to the six states' case and begin hearing arguments in February 2023.

Will Federal Student Loan Payments Resume During the Legal Fight?

Federal student loan payments have been suspended since the Covid-19 pandemic began in March 2020. The Biden administration in November 2022 announced it doesn’t want federal student loan repayments to resume until the student loan forgiveness legal challenges are resolved in court. Amid the uncertainty surrounding the legal dispute, the U.S. Department of Education announced an open-ended extension to the federal student loan payment pause. Payments may now resume as late as 60 days after June 30, 2023, according to the Education Department’s announcement. As noted earlier, the U.S. Supreme Court has agreed to hear Biden’s appeal beginning in February 2023. It's possible the court will make a decision on the legality of the one-time student loan forgiveness program by June 30, 2023.

What Are the Legal Cases Against Biden?

Here are some of the high-profile lawsuits against Biden’s student loan forgiveness plan:

Myra Brown and Alexander Taylor vs U.S. Department of Education et al.

According to their lawsuit, plaintiff Myra Brown is not eligible for any debt forgiveness under Biden’s one-time debt relief plan because her loans are commercially held, and plaintiff Alexander Taylor is ineligible for the maximum $20K in debt relief because he did not receive a Pell Grant. Biden’s program would provide up to $10K in debt relief to eligible federal student loan borrowers with annual incomes below $125,000 ($250,000 for married couples) and an additional $10K for Pell Grant recipients. Borrowers with commercially held loans are not eligible for this relief, including borrowers with privately held Federal Family Education Loans (FFEL) and Perkins Loans. In his analysis, District Judge Pittman found that Brown and Taylor had standing to sue. Then he ruled on the merits and deemed the forgiveness program unlawful for lacking what he called “clear congressional authorization.” The Job Creators Network Foundation helped both plaintiffs bring the lawsuit and applauded Pittman’s decision in a press release. The White House issued a statement saying, “We strongly disagree with the District Court’s ruling on our student debt relief program and the Department of Justice has filed an appeal.”

State of Nebraska et al. vs Joseph R. Biden Jr. et al.

As mentioned earlier, the states of Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina, have filed federal complaints alleging Biden’s one-time forgiveness plan is unlawful and not authorized by Congress. U.S. District Judge Henry Edward Autrey dismissed this lawsuit in October 2022, finding the states lacked jurisdiction to bring action. All six states appealed that decision to the U.S. Court of Appeals for the Eighth Circuit, which granted an injunction on Nov. 14, blocking Biden’s program until further notice. The appeals court found Missouri “likely has legal standing to bring its claim,” allowing this once-dismissed lawsuit to move forward. The Biden administration has the right to appeal the injunction order to the Supreme Court. The administration says it is asking the Supreme Court to review the lower-court orders that are preventing the Education Department from providing debt relief for tens of millions of Americans.

Cato Institute vs U.S. Department of Education et al.

The Cato Institute, a nonprofit with headquarters in the District of Columbia, sued the Biden administration in October 2022, filing a federal complaint and demanding a trial by jury. Biden’s “Loan Cancellation Program is arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law and must be set aside,” attorneys for the Cato Institute said in the complaint filed in Kansas federal district court. This lawsuit remains active. With the Biden administration’s debt relief plan in limbo, “We will never stop fighting for hard-working Americans most in need,” the White House said in a November 2022 statement, “no matter how many roadblocks our opponents and special interests try to put in our way.”

Can Student Debt Relief Still Occur if Biden Loses the Court Fight?

Federal student loan borrowers may have other options for student loan forgiveness if Biden’s program dies in court. Here are some of the debt relief programs you may explore:

State-based student loan forgiveness programs

Pharmacy school loan forgiveness

Medical school loan forgiveness programs

U.S. Navy Loan Repayment Program

Other military student loan forgiveness programs

Public Service Loan Forgiveness

Public employees with federal student loan obligations may have access to the Public Service Loan Forgiveness program. The PSLF program can forgive the remaining balance on your federal student loans after you have made 120 qualifying monthly repayments as a public employee.

Income-Driven Repayment Plans

The U.S. Department of Education also offers the following income-driven repayment plans that may grant student loan forgiveness after 20 or 25 years:

Income-Contingent Repayment (ICR)

Revised Pay As You Earn Repayment (REPAYE)

Pay As You Earn Repayment (PAYE)

Income-Based Repayment (IBR)

What About Private Student Loan Forgiveness?

Private student loans are not eligible for Biden’s one-time forgiveness program, including education loans issued by banks and financial technology companies. Private student loans, however, may qualify for certain state-based debt relief programs, including some New York student loan forgiveness programs. The difference between private and federal student loans is that federal student loans are provided exclusively by the U.S. Department of Education, whereas banks, credit unions, online lenders, and select state-based or state-affiliated organizations may offer private student loans. Private lenders generally have no obligation to offer debt forgiveness on private student loans. You may contact your loan servicer if you have any questions about your student loans. Recommended: How Do I Find My Student Loan Lender?

The Takeaway

Amid litigation and federal student loan payments on pause, the U.S. Supreme Court has agreed to hear arguments and determine whether Biden’s one-time student loan forgiveness program is constitutional. Justice Amy Coney Barrett to date has rejected a handful of civil-action complaints challenging the legality of Biden’s debt relief program. There’s no guarantee Biden will win on appeal, and the high court appears to be in no rush to decide whether Pell Grant recipients will receive $20K in federal debt relief. In the meantime, holders of federal student loan debt get another break and will not need to make payments in January 2023, as was previously expected.

3 Student Loan Tips

Once the pandemic-related pause on federal student loan payments ends, going back to making payments may be hard on budgets. One solution is to refinance to a lower interest rate, longer loan term, or both, depending on your situation. (The tradeoff is that you’ll be forfeiting federal benefits such as repayment programs.) Find and compare your student loan refinance options.

Paying extra each month on your student loan can reduce the interest you pay and so lower your total loan cost over time. (The law prohibits prepayment penalties on federal or private student loans.)

If you teach full-time for five complete and consecutive academic years in a low-income school, you may be eligible for federal student loan forgiveness.

Compare student loan refinance rates without impacting your credit score.*

Frequently Asked Questions

Does President Biden have the legal authority to forgive student loans?

What will Congress do if Biden’s debt relief plan is ruled unlawful?

When will federal student loan payments resume?

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Photo credit: iStock/Andrii Yalanskyi

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About the Author

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and currently serves as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.

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