Biden officially asks the Supreme Court to rule on student loan forgiveness

The Biden administration on Friday set the stage for a possible final decision on his student loan forgiveness program by formally asking the Supreme Court to review the matter.

The emergency appeal asks the high court to intervene into a multifaceted legal dispute that has now seen two federal courts put the program on hold.

The Biden administration is seeking an immediate restart of the program and the authority to begin giving out forgiveness, starting with the 16 million applicants who the White House says have already been approved for at least some loan cancellation.

"The Eighth Circuit’s erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations," U.S. Solicitor General Elizabeth Prelogar wrote in the appeal.

Friday’s action is responding to a recent injunction from the Court of Appeals for the 8th Circuit in a case brought by a group of conservative states. Officials in those states banded together to argue that the Department of Education exceeded their authority with the program. The case is just one of the myriad legal challenges that the program has faced in recent months.

The filing lists President Biden and Education Secretary Miguel Cardona as the parties to the proceeding for the government and argues that Congress “specifically authorized” Cardona to take the action he did under a 2003 law called the HEROES act.

A array of legal challenges

In August, the Biden administration announced his plan to forgive $10,000 of student debt for people making less than $125,000 and an additional $10,000 for those who received Pell Grants, which go to borrowers with extreme financial need. Biden's opponents contend it's too expensive, oversteps the President’s authority, and doesn't address the root problems that make college so expensive.

The program drew immediate legal challenges and the key case right now originates out of Missouri where the U.S. Court of Appeals for the Eighth Circuit recently ruled in favor of officials from Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. They argued the program threatens the states' future tax revenues. A lower court had dismissed the suit for lack of standing, but the higher court reversed that decision.

Now it appears up to the highest court in the land.

One of the plaintiffs in that case — Nebraska Attorney General Doug Peterson — recently said that stopping the program was important so that “the legal issues involving presidential power be analyzed by the court before transferring over $400 billion in debt to American taxpayers.”

Biden's program has also been halted in a separate case out of Texas where a conservative advocacy group called the Job Creators Network Foundation, which was founded by Home Depot co-founder Bernie Marcus, filed a lawsuit. That suit is on behalf of two plaintiffs who say the plan's rules excluded them and they never got a chance to comment on the plan.

A decision on if 'the President overstepped his authority’

Many experts predict that a Supreme Court hearing may not go the administration’s way because it's an open question whether Biden and Cardona overstepped their legal authority in this matter.

Financial aid expert Mark Kantrowitz was blunt in a recent Yahoo Finance interview saying: “If it reaches the U.S. Supreme Court, the Biden administration is going to lose.”

Committee for a Responsible Federal Budget’s Marc Goldwein added in a separate interview that "there's a good chance courts are going to look at this and say, the president overstepped his authority — spending is really the authority of the Congress.”

Given the possible uphill legal climb, the White House has tried to get the different legal challenges tossed out based on the issue of standing, an argument it reiterated in Friday's filing. But it remains to be seen if the Supreme Court focuses on that aspect of the case or the plan itself if it takes up the issue in the coming weeks.

For now, the new application for forgiveness are on hold and Biden and his team are reportedly mulling the an extension of the student loan repayment pause — which is set to expire on December 31 — if legal challenges are still outstanding or don't go their way.

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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