The Supreme Court heard arguments on loan forgiveness. Here's why it matters to Louisiana.
The U.S. Supreme Court heard oral arguments Tuesday on whether the federal government has the authority to wipe out up to $10,000 in federal loan debt for most borrowers and up to $20,000 for Pell Grant recipients, including around 381,000 that have been approved in Louisiana.
Several states — including Nebraska, Iowa, Arkansas, Kansas, Missouri and South Carolina — have sued to prevent the government from forgiving the loans. A district court in Texas and the 8th Circuit Court of Appeals blocked the student loan debt relief, and the federal government has appealed the decision to the highest court.
Here’s why this matters in Louisiana:
How many Louisiana borrowers would be impacted?
Louisiana has more than 650,000 borrowers with student loan debt, according to the Education Data Initiative, and those borrowers owe a combined $22.5 billion. But the plan announced by President Joe Biden would not cover all those borrowers, focusing only on federal loans.
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The program would also be limited to individuals earning less than $125,000 per year or households earning less than $250,000. More than 600,000 Louisiana borrowers were identified as eligible for the relief, and nearly 400,000 Louisiana applicants were approved before the federal ruling forced applications to be taken down, the La. Illuminator reported.
Why are the states suing?
The states that brought the lawsuit have argued that they will see some financial harm if the loans are forgiven, especially if many borrowers who took out Federal Family Education Loans choose to consolidate their debt into direct loans. USA TODAY reported that the Biden Administration initially encouraged borrowers to do that to be eligible for relief, but it cut off that plan.
The FFEL loans are federally backed but are commercially held and serviced by quasi-state agencies in several of the states that brought the suit, USA TODAY reported. Even though the Biden Administration stopped its FFEL plan, the states argued it happened after they brought the suit, so the consolidation question is still relevant.
What did the justices say?
The conservative justices appeared to be skeptical of the federal government’s authority to cancel the debt under the Higher Education Relief Opportunities for Students Act, often called the HEROES Act. Many of the questions related to whether the debt cancellation fit under the power to “waive or modify” the debt in times of emergency.
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Chief Justice John Roberts recalled an argument previously made by the late Justice Antonin Scalia about the way modifications should be interpreted.
“He said it might be good English to say that the French Revolution modified the status of the French nobility, but only because there's a figure of speech called understatement and a literary device known as sarcasm,” Roberts said.
Roberts went on to express concerns about whether half a trillion dollars in cancellations fit the normal definition of modification.
The Supreme Court’s conservative justices currently hold a 6-3 majority.
When will a decision be announced?
The decision won’t be released until later this year, and it’s important to note that justices’ leanings or questions during arguments don’t always correspond with how they ultimately vote on the issue.