Supreme Court Strikes Down Student Loan Forgiveness Program

The U.S. Supreme Court has issued rulings in Department of Education v. Brown and Biden v. Nebraska, two lawsuits regarding the Biden Administration’s plan to forgive federal student loan debt of up to $20,000 per borrower. The impact of the Nebraska decision will be to stop the Administration’s plan from proceeding as announced. ASHA is concerned that this ruling will continue uncertainty regarding potential loan forgiveness just as loan repayment resumes.

In Brown, two borrowers sued the Administration arguing that the plan and the way it was announced deprived them of loan forgiveness (because they held private loans) or of its full benefits (since they were not Pell Grant recipients). The Court unanimously held that the borrowers did not have standing to sue the Administration.

In Nebraska, six states sued the Administration, arguing that the loan forgiveness plan would deprive the states of revenue and that implementing the plan exceeded the Department of Education’s authority. However, the Administration argued that the states did not have standing to sue the Department, as they were not specifically impacted.

The Court disagreed, holding that the states did have standing to sue the Administration over the plan and that the Administration’s plan exceeded the authority provided by the Higher Education Relief Opportunities for Students Act of 2003. The Court held that “the Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up.”

What’s Next?

As a result of the Court’s ruling, the Administration will not be able to proceed with the previously announced plan. The Department has instead initiated a formal negotiated rulemaking process, with the goal of providing an alternative path to debt relief through this process.

Additionally, the Administration has announced two steps to support borrowers during the resumption of federal student loan interest accrual beginning September 1, 2023, and payments beginning in October 2023.

1. The Department announced the details of the new Saving on a Valuable Education (SAVE) Plan. This plan will provide a new income-driven repayment plan for federal student loan borrowers.
2. Information regarding an ‘on-ramp’ for borrowers during the resumption of payments, during which time missed, partial, or late payments will not lead to negative credit reporting, default, or loans being sent to collection agencies.

ASHA supports efforts to improve access and affordability for students enrolled in communication sciences and disorders programs. This includes improvements to the Public Service Loan Forgiveness program and income-driven repayment plans, as well as expanding grant opportunities for students from diverse backgrounds to better afford audiology and speech-language pathology degrees, which was enacted with ASHA’s support last year.

Questions?

For more information on the resumption of federal student loan payments, visit Federal Student Aid’s website or read the White House’s fact sheet on new actions to provide debt relief and support for student loan borrowers. Read more about the Biden Administration’s plan to forgive federal student loan debt in ASHA’s December 2022 Leader article.

For questions, contact Eric Masten, ASHA’s director of federal affairs, education, at emasten@asha.org.