Student loan borrowers gathered at the Supreme Court in Washington, D.C., the night before the court heard two cases regarding the White House’s student loan relief plan.
Jemal Countess | Getty Images Entertainment | Getty Images
WASHINGTON — The night before the Supreme Court heard oral arguments on the Biden administration’s plan for student loan forgiveness, Amanda Smithley sat outside the court on an aluminum blanket, holding an umbrella.
He didn’t know when he planned to spend the night in front of the high court that it would rain heavily, but he didn’t get discouraged.
“I feel great,” said Smithley, 20, who already has about $10,000 in student debt as a sophomore at PennWest California. She’ll have to shell out more if she wants to fulfill her hopes of graduating and becoming a high school history teacher.
“I really, really care about student debt, not even just for me,” Smithley said. “I want to live in a world where my future students and maybe future children don’t have to worry about going into thousands in debt just because they want to continue their education.”
Student loan borrower Amanda Smithley, 20, joined student loan borrowers gathered at the Supreme Court on Feb. 27, 2023, the evening before the court heard two student loan forgiveness cases.
Annie Nova | CNBC
The court will hear two cases against the pardon
Despite the cold, borrowers gathered outside the Supreme Court on Monday to demonstrate in favor of the Biden administration’s forgiveness plan. More than 35 million student loan borrowers can take advantage of the policy and get up to $20,000 of their debt forgiven. If implemented, about $400 billion in debt would be wiped out.
But the program has been on hold since the fall, when a federal appeals court panel in St. Louis issued a temporary injunction preventing it from taking effect. The Supreme Court kept that ban in place while it heard challenges to the plan, and the government voluntarily stopped accepting applications for the program in November.
On Tuesday, the Supreme Court heard two separate cases regarding President Joe Biden’s debt relief plan.
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The first, originally filed by six Republican-led states in federal court in Missouri, argued that the Biden administration did not have the legal right to cancel student loan debt without authorization from Congress.
The second lawsuit, filed by Myra Brown and Alexander Taylor, in U.S. District Court in Texas, alleges that they and other members of the public were wrongfully denied the right under federal procedures to formally comment on the debt relief plan, which could be affected its design before it entered into force.
The Job Creators Network Foundation, a conservative advocacy group, is supporting the plaintiffs in this case.
Experts say the debt-relief plan is likely to be ruled illegal by a majority of the court’s six judges if that bloc finds that one or more of the plaintiffs in both cases have the necessary legal standing, known as standing, to sue. challenging program.
“For many people it’s life and death”
Student loan borrower John Runningen was also among those planning to sleep outside the Supreme Court on Monday night. He attends Minnesota State Community and Technical College and owes $5,000.
This debt has already made his life more difficult.
“It stopped me from buying a vehicle, moving out of my parents’ house and helping my parents with the stress of their bills,” Runningen, 22, said.
As a first-generation college student, he hoped to break the cycle of poverty and help his parents. His father is a farmer and his mother works at a gas station. With a monthly student loan bill of $175, however, he won’t be able to help them.
Student loan borrowers gathered in front of the US Supreme Court on February 27, 2023, the night before the court heard two student loan forgiveness cases.
Annie Nova | CNBC
“It may not seem like a lot of money to some people, but for rural communities or those affected by poverty, it will be the difference between being able to give my family food or [being] we can afford an electric bill,” Runingen said.
Within three weeks of opening the application process, the Biden administration said more than 26 million people had applied for the relief, with 16 million applications approved.
There is no precedent in US history for the massive debt relief the White House has promised to deliver, although consumer advocates point out that major corporations and banks have been bailed out by the government after going through their own crises. And they say canceling much of the education debt is needed to relieve the many borrowers struggling with a broken credit system.
Student loan borrowers were having trouble repaying their debt before Covid. Only about half of borrowers were in repayment in 2019, according to an estimate by higher education expert Mark Kantrowitz. A quarter—or more than 10 million people—were in arrears or in default, and the rest applied for temporary relief measures for troubled borrowers, such as forbearance or forbearance.
Those grim numbers have drawn comparisons to the subprime crisis of 2008 and increased pressure on Biden to deliver relief.
“For a lot of people, it’s life and death,” said Thomas Goecki, co-founder of the Debt Collective, a national debtors’ union. “At stake is being forced to choose between paying off student loans or being able to buy groceries, make rent and pay medical bills.”
— Annie Nova reported from Washington and Dan Mangan reported from New York.