Misconceptions about student loan Supreme Court: The student loan debt crisis has been making headlines recently as the total outstanding student loan debt in the United States surpassed $1.7 trillion.
With rising tuition costs and increased enrollment in higher education, student loan debt has skyrocketed over the past decade.
In June 2022, the Biden administration announced a plan to cancel up to $10,000 in federal student loan debt for borrowers making under $125,000 per year.
This announcement has sparked much debate and discussion around student loans and potential relief measures.
The possibility of broad student loan forgiveness has also shone a spotlight on the student loan system.
A major case related to the student loan system is currently before the U.S. Supreme Court.
In Biden v. Nebraska, the Court considers whether the administration has the executive authority to enact broad student loan cancellation.
This high-profile case has many consumers needing clarification about what is at stake.
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10 Misconceptions About Student Loan Supreme Court
Here we will clear up ten common misconceptions about the student loan supreme court case:
1. The Supreme Court Will Decide if Student Loan Forgiveness Can Happen
This is not entirely accurate. The Court is not ruling on whether student loan forgiveness is allowable but on who can cancel student loans.
The central question is whether the executive branch (the Biden administration) can enact broad student loan forgiveness or if this power lies solely with Congress.
The Court is not deciding if student loan cancellation will happen – only who can decide.
The White House firmly believes it has executive authority to cancel student loans. However, this major legal question must be resolved first.
2. Student Loan Forgiveness Hinges Entirely on the Court’s Decision
While the Supreme Court case carries major implications, it does not represent the entire future of student loan forgiveness.
The Biden administration has already enacted targeted student loan cancellation for certain borrowers. These targeted measures have discharged over $31 billion in student loans.
Additionally, broad student loan forgiveness could progress even if the Court rules the executive branch lacks authority.
Congress could pass legislation to enact broad cancellation, although this path remains to be determined given the current political climate.
The Court’s decision is influential but does not single-handedly determine the fate of student loan forgiveness. Other avenues remain open.
3. The Supreme Court Is Ruling on Biden’s Specific Forgiveness Plan
This is inaccurate. While the case relates to the Biden administration’s cancellation initiative, the Court is not determining the legality of the specific program details.
Rather, the case concerns whether any president can enact wide-scale student loan forgiveness under executive power. The Court is setting a precedent on executive versus congressional authority limits.
The legality of Biden’s specific program – such as the income thresholds and caps on cancellation – is not under consideration.
The Court is interpreting which branch of government can broadly cancel student loans.
4. Student Loans Will Never Be Forgiven if the Court Rules Against Debt Cancellation
It would be false to say this Supreme Court case represents the final word for future student loan forgiveness.
While the Court certainly holds major influence, its decision does not permanently foreclose all cancellation options.
If the Biden administration loses this case, broad student loan cancellation cannot move forward under executive power alone.
Legislative student loan forgiveness proposed by Congress would remain a possibility, though passage is still being determined.
Additionally, the White House could modify cancellation parameters to target specific groups of borrowers in a way that may be legally permissible.
The Court’s ruling would shut down the most expansive plans only.
5. The Supreme Court Case Will Impact All Student Borrowers
The case before the Supreme Court relates specifically to federal student loans held by the Department of Education.
This represents the majority of student loan debt but excludes private student loans.
Borrowers with private student loans would be unaffected by the Court’s ruling, as the private lenders holding the debt would initiate any potential cancellation of private loans, not the federal government.
Additionally, federal student aid recipients like Pell Grants are not directly involved in this legal question focused solely on loan cancellation authority.
The Court’s decision here will impact federal student loan borrowers specifically.
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6. The Supreme Court Is Split Along Partisan Lines on This Case
Unlike many high-profile cases, the Supreme Court justices are not divided along common ideological lines. The case does not come down to conservatives vs. liberals.
Interestingly, conservative justices such as Amy Coney Barrett have suggested the administration may have legal grounds to cancel student loans under the 2003 HEROES Act, which provides loan relief powers in a national emergency.
Meanwhile, some liberal justices have doubts about such broad unilateral executive action.
The justices appear focused on interpreting the specific legal questions rather than partisan leanings. The ruling may defy the stereotypical split expectations.
7. The Student Loan Moratorium Will End if Cancellation Is Struck Down
The student loan payment/interest freeze, known as the moratorium, has been extended multiple times since 2020.
This provides temporary relief for borrowers. Some believe the moratorium will automatically expire if the Supreme Court rules against debt cancellation.
However, the moratorium is legally distinct from the debt forgiveness question before the Court.
The Biden administration enacted the payment freeze under separate emergency authority granted by Congress at the start of the COVID pandemic.
The moratorium’s eventual end may coincide with the Court’s decision, but it would not be a direct result.
The White House can again extend the payment/interest freeze for unrelated reasons, regardless of the debt cancellation outcome.
8. Private Student Loan Borrowers Will Receive a Cancellation
As mentioned, the Supreme Court case relates specifically to federally held student loans. Private student loans from banks and other lenders are governed entirely differently.
No legal authority exists for the federal government to force private lenders to cancel their voluntarily issued student loans.
Any potential private student loan forgiveness would be determined on a lender-by-lender basis.
The Supreme Court case will not set any precedent regarding private loan cancellation. Relief for these borrowers remains highly unlikely and would not result from federal action.
9. The Supreme Court Case Will Fix the Student Loan System for Good
Realistically, the Supreme Court’s ruling can only resolve the narrow legal question up for debate – whether the executive or legislative branch controls broad student loan forgiveness policy.
It does not address or remedy the issues plaguing the dysfunctional student loan system.
Challenges such as rising college costs, predatory lending practices, funding shortfalls for aid programs, and complex repayment options extend far beyond this case.
While influential, this legal question represents one small piece of the complex student debt puzzle.
We cannot expect the Court’s decision to fix the system in the long run. Impactful improvements require legislative reform.
10. If Cancellation Is Allowed, Student Loan Debt Will Be Eliminated
Even in the scenario where the Supreme Court green-lights broad student loan forgiveness, total debt elimination is unlikely soon.
Biden’s plan comes with distinct limits – capping maximum individual cancellation at $10,000 or $20,000 based on income.
With average debt burdens nearing $30,000 per borrower, this one-time cancellation level will only partially clear balances. While providing relief, Biden’s program leaves sizable debt in place.
Of course, greater future cancellation is hypothetically possible through further legislation or executive action.
But this specific Supreme Court case will only partially erase student loans across the board. More extensive reform is required for such an outcome.
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Final Thoughts
The student loan system has reached a pivotal junction, with the Supreme Court set to weigh in on a crucial legal debate surrounding debt cancellation powers.
But stark misunderstandings pervade public discourse on the implications of this case. This ruling will provide influential but limited insight into the authority to enact forgiveness.
Challenges surrounding college affordability and student debt will persist regardless, demanding ongoing legislative solutions.
Maintaining realistic expectations of this Court decision is key, as sweeping strokes of judicial influence are unlikely.
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