Supreme Court to Review Biden’s $17 Billion Student Loan Forgiveness Rule

The U.S. Supreme Court is set to review a Biden administration rule that has facilitated the forgiveness of $17 billion in student loan debt for borrowers defrauded by their colleges. The decision comes after a lower court blocked the rule, sparking a nationwide debate over federal authority in addressing student debt.

Since taking office, President Joe Biden‘s administration has approved approximately $180 billion in student loan debt forgiveness, benefiting nearly 5 million Americans. The borrower defense to repayment rule, originally introduced in 1994 and updated multiple times, was most recently revised in 2022 under Biden’s leadership. The updated rule, which took effect in 2023, aimed to simplify the process for defrauded borrowers to seek relief.

However, the rule faced a legal challenge from Career Colleges and Schools of Texas (CCST), which argued that the updated criteria made it too easy for students to claim relief, potentially harming for-profit institutions. In 2023, the 5th U.S. Circuit Court of Appeals sided with CCST, halting the rule’s implementation nationwide and imposing restrictions on the Department of Education‘s ability to grant relief.

The Supreme Court’s review will determine whether the lower court erred in ruling that the Higher Education Act of 1965 does not allow borrowers to file for borrower defense before default. The outcome could have significant implications for both borrowers and higher education institutions.

Jason Altmire, president and CEO of Career Education Colleges and Universities, told Politico that the Supreme Court’s decision to hear the case does not validate the Biden administration’s arguments. ‘It simply means that the Supreme Court will hear arguments as to the scope of the Department of Education’s authority related to [the borrower defense rule],’ Altmire said.

Eileen Connor, president of the Project on Predatory Student Lending, expressed hope that the Supreme Court would correct the 5th Circuit’s decision. ‘The reason the administration wanted the Supreme Court to look at the case is because it’s fundamentally wrong and stripping away a critical protection for students,’ Connor said.

Kevin Thompson, founder and CEO of 9i Capital Group, noted that borrowers should not expect much relief under a potential Trump administration. ‘Borrowers shouldn’t expect much relief under Trump. He has never been a proponent of widespread debt forgiveness,’ Thompson told Newsweek.

The Supreme Court’s decision could mark a turning point in the Biden administration’s efforts to expand student loan forgiveness, a key policy focus of his presidency. If the rule is curtailed, it would represent a significant setback for millions of borrowers seeking relief.