According to Politico, the US Supreme Court will weigh in on a student loan debt relief policy that allowed the Biden administration to forgive $17 billion.

Newsweek asked the White House via email and the Supreme Court via an online form for comment on Saturday afternoon.

Why it matters

Since taking office, President Joe Biden and his administration have launched several student loan forgiveness efforts, as the Department of Education (DOE) has approved approximately $180 billion in student loan debt relief. That affected nearly 5 million Americans, and millions of others faced lower monthly payments because of Biden’s income-driven repayment programs. But this comes as the Supreme Court has previously rejected Biden’s sweeping forgiveness efforts.

What you should know

The court will weigh in on a controversial Biden administration rule aimed at simplifying the process for student loan borrowers defrauded by their colleges to apply for loan forgiveness.

As of April 2024, the Biden administration has canceled more than $17 billion in loans for borrowers defrauded by their institutions, using the borrower defense-to-repayment rule. Originally introduced in 1994, the rule was updated in 2016, 2019 and most recently in 2022 under Biden’s leadership. The latest revision aimed to provide greater clarity on the criteria for making claims and officially came into force in 2023.

But the high court’s review follows a lower court decision that blocked the rule as the Biden administration’s efforts faced a major legal hurdle in 2023 when Career Colleges and Schools of Texas (CCST) filed a lawsuit against the Submitted a directive. CCST argued that the updated borrower defense rule made it too easy for students to apply for relief, potentially harming for-profit institutions.

Later that year, the 5th U.S. Circuit Court of Appeals sided with the CCST and halted nationwide implementation of the rule. The court’s decision significantly limited the Department of Energy’s ability to grant relief, stating that forgiveness could only be granted if a borrower had defaulted on its loan and the government had taken legal action to recover the loan.

The ruling has since sparked a heated debate about the extent of federal authority to address student debt and could have lasting impacts on both borrowers and higher education institutions.

The court will consider whether the lower court erred when it ruled that the Higher Education Act of 1965 does not allow borrowers to file a borrower’s defense application before default.

This comes as President-elect Donald Trump prepares to take office on January 20, and many Americans across the country are wondering what this will mean for their student loans.

Borrowing concerns arise because Trump has opposed student loan forgiveness in the past and his influence over the Energy Department could have far-reaching and far-reaching effects.

Based on Trump’s track record, it is unlikely that student loan borrowers will see further relief under the new administration. During his first term, his administration pushed to increase monthly payments from 10 to 12.5 percent of borrowers’ discretionary income and also sought to consolidate all income-based repayment plans into one simplified option. These moves could resurface in his second term.

What people say

Jason Altmire, president and CEO of Career Education Colleges and Universities, told Politico on Friday The court’s decision does not support the Biden administration’s arguments.

“It just means the Supreme Court will hear arguments about the scope of the Department of Education’s authority in connection with (the borrower defense rule). It remains to be seen how the new Trump administration will take the government’s side in the case, but.” “We firmly believe that the facts of the case will show that the Department’s burdensome actions (borrower defense rule) go far beyond that.” the authority’s authority,” Altmire said.

Eileen Connor, the president of the Project on Predatory Student Lending, told Politico in an interview Friday“The reason the administration wanted the Supreme Court to hear the case is because it is fundamentally wrong and takes away important protections for students that Congress indisputably authorized. I hope this will be an opportunity to correct the 5th Circuit.”

Kevin Thompson, the founder and CEO of 9i Capital Group, said previously Newsweek: “Borrowers shouldn’t expect much relief under Trump. He has never been a proponent of comprehensive debt relief, and history suggests that he sees personal responsibility as the basis of financial obligations. Trump University’s $25 million settlement serves as a reminder that he is not doing this. “It is not easy to part with money and many believe he is waging a vendetta against anything resembling a government bailout of individuals.”

What happens next

While it is unclear what Trump will do after his term as the court agrees to review the lower court’s decision in the Borrower Defense Rule, the future of the Biden administration’s efforts to expand loan forgiveness could be in jeopardy. If the rule is cut, it would be a significant setback to Biden’s core student debt policies – a focus of his presidency.