Rule of Law

The Supreme Court Is Set to Rule on Student Loan Forgiveness. Here’s What Could Happen Next

The Supreme Court is poised to hear back-to-back oral arguments for two student loan-related cases on Tuesday, in what could be the final hurdle for the Biden administration’s student loan forgiveness plan.

In August, President Joe Biden announced a program that would forgive up to $20,000 in debt for borrowers with federally held student loans, impacting more than 40 million borrowers. Applications for the program opened in October, but a federal judge in Texas put the program on hold in November, ruling that the program was “unlawful.”

In both of the cases heading to the Supreme Court, Biden v. Nebraska—a lawsuit that was brought forward by the states of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina— and Department of Education v. Brown—which was brought forward by two plaintiffs who believe they were unjustly excluded from the relief—the Supreme Court will decide whether the student loan relief plan exceeds the Department of Education’s authority and whether the lawsuits have legal standing.

More than 26 million Americans applied for student loan forgiveness, and another 16 million applicants were fully approved for relief when the program was paused, according to the White House.

Here’s what to know about the cases.

What’s happened so far

Conservative organizations and states have filed numerous lawsuits against the Department of Education, with the first filed a month after Biden first announced his student loan debt forgiveness plan. That lawsuit was later dismissed by a federal judge. But two of those cases have escalated to the Supreme Court.

Six Republican-led states filed Biden v. Nebraska, arguing that in addition to the administration overreach, the program would cause states to lose tax revenue as a result of debt cancellation. U.S. District Judge Henry Autrey initially dismissed the case saying that it lacked legal standing. The Eighth Circuit Court of Appeals, however, later decided that Missouri had legal standing because a loan servicer in the state would lose substantial revenue.

Department of Education v. Brown was filed by Alexander Taylor and Myra Brown. Brown is not eligible for any relief, and Taylor is only eligible for $10,000 (rather than the up to $20,000 given to Pell Grant recipients)They also argue that the administration did not go through the Administrative Procedure Act’s notice-and-comment procedure, which requires agencies to notify the public of their proposal and take comments.

Biden’s student loan forgiveness plan is contingent on the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, which allows the Department of Education to modify student financial assistance programs in response to national emergencies to alleviate borrowers’ financial hardship. Former President Donald Trump used the act for the student loan moratorium, which began during the pandemic and is still in place for the next few months. Programs implemented under the HEROES Act are exempt from the notice-and-comment period, but plaintiffs in the Department of Education v. Brown case say that the Education Department does not have the authority to act under this law.

The Education Department argues that it has the right to administer their relief plan because many borrowers face risk of defaulting on their student loans.

“Our debt relief plan is needed to prevent defaults and delinquencies as student borrowers transition back to repayment after the end of the payment pause,” an administration official previously told TIME. “There was a national emergency that impacted millions of student borrowers. Many of those borrowers still face risk of default on their student loans due to that emergency. Congress gave the Secretary of Education the authority under the HEROES Act to take steps to prevent that harm, and he is.”

Organizations like the Constitutional Accountability Center, which filed a brief in the Supreme Court on behalf of Rep. George Miller, a co-sponsor of the HEROES Act, agree. They allege that when Congress passed the act, it “planned to give the Secretary of Education broad discretion and ‘flexibility’ to protect student loan recipients from military emergencies, national disasters, and any ‘unforeseen issues that may arise.’”

What could happen next?

The conservative-led Supreme Court will not announce their decision until weeks down the line, though the exact date is unknown.

If the Supreme Court votes in favor of Biden’s plan, applications would move forward and previously-approved Americans would see a significant portion of their debt wiped out.

Legal experts previously told TIME that the future of student loan forgiveness is uncertain because borrowers did not have to show that they faced financial hardship because of the COVID-19 emergency in their application.

“The only excuse for not actually having any step to show a causation or correlation from the emergency would be if the emergency was still happening,” Jed Shugerman, a professor at Fordham Law School, said. The Biden administration announced in January that the COVID-19 national and public health emergency would come to an end in May.

The Education Department, however, maintains that it has the right to implement its debt relief program regardless of whether the country is still in a national emergency because the effects of the pandemic are still being felt by many Americans. In a brief filed to the Supreme Court, they say that the HEROES Act authorizes the Secretary of Education to ensure that recipients of financial assistance “who are affected individuals are not placed in a worse position financially in relation to that financial assistance.”

The brief argued that because of inflationary pressures and the potential for high delinquency rates when student loan payments resume, the loan-forgiveness program is just.

If the Education Department is not allowed to implement their forgiveness program, and litigation about the program is not resolved by June 30, student loan payments will resume 60 days after that.

“We remain confident in our legal authority to adopt this program that will ensure the financial harms caused by the pandemic don’t drive borrowers into delinquency and default,” said Secretary Cardona in a January statement. “We are unapologetically committed to helping borrowers recover from the pandemic and providing working families with the breathing room they need to prepare for student loan payments to resume.”