WASHINGTON — The Biden administration plans to ask the Supreme Court to reinstate the president's student debt cancellation plan, according to a Thursday legal filing warning that Americans will face financial strain if the plan remains stalled in court when loan payments are scheduled to restart in January.
Biden's plan promises $10,000 in federal student debt forgiveness to those with incomes of less than $125,000, or households earning less than $250,000. Pell Grant recipients, who typically demonstrate more financial need, are eligible for an additional $10,000 in relief. "We anticipate there could be an historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic," Education Undersecretary James Kvaal said in a Tuesday filing."This could result in one of the harms that the one-time student loan debt relief program was intended to avoid."
Biden's plan has drawn a flurry of legal challenges, which have seen mixed results. Opponents of debt forgiveness have asked the Supreme Court to intervene at least twice after their cases failed in lower courts. The Supreme Court rejected both requests. Advocates and some Democrats in Congress are pressuring Biden to extend the payment pause until all legal challenges are resolved, despite his previous assurance that the freeze would end after Dec. 31.
When borrowers in bankruptcy try to get their federal student loans canceled, lawyers for the government have typically moved to block it.