What were the eligibility requirements for loan forgiveness?

President Biden had promised to cancel some portion of student loan debt while campaigning for president in 2020. After he was elected members of his party pushed for him to follow through but that wouldn’t happen until last August.

While the details didn’t go far enough for some, he said that his administration would cancel up to $20,000 in student loan debt, it was too much for others. Legal challenges to the program ended up putting the debt relief plan on hold until the Supreme Court could decide on its legality.

On Friday the justices gave their opinion. In a six-to-three decision, the conservative majority found the executive order was not authorized under the emergency law from 2003 the White House had used.

Now there are 16 million borrowers who managed to submit an application to have the debt forgiven and who were approved. What will happen to their loans?

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Who would have been eligible for student debt relief?

The program offered $10,000 in debt relief for borrowers with an individual income of no more than $125,000 per year or $250,000 for couples who file jointly.

There was an additional $10,000 in debt forgiveness for borrowers who received a Pell Grant while in college, allowing them to write off up to $20,000 in student loan debt. The Pell Grant is typically awarded to undergraduate students from low-income households.

After the application period in late 2022, the White House reported that more than twenty-six million applicants had submitted a request to have all or part of their debt canceled. Of those applications, the Department of Education fully approved over 16 million and the servicers were sent discharge letters. However, that took place after an injunction had been placed on the program, so those borrowers’ balance will be what it was in March 2020, if there were no additional loans taken out since nor payments made in the interim.

Why did the student loan forgiveness program end up in the Supreme Court

Shortly after the Department of Education launched its online portal for student loan borrowers to submit a petition to receive up to $20,000 in student loan relief lawsuits from GOP-led states were filed. The District Court in St Louis temporarily blocked the program while legal proceedings played out pausing acceptance of application submissions.

Then a District Court in Texas hearing another lawsuit declared the program “unlawful” and vacated it, putting a hold on processing anymore of the applications received. The two cases were fast-tracked to the Supreme Court for oral arguments which took place in late-February.

Essentially, the argument boiled down to the financial harm such a large-scale relief program would have for taxpayers who didn’t have student loans themselves, as well as to states who would lose out on revenues for loan repayments. Questions were raised about the emergency power granted by the HEROS Act of 2003 that the White House used to justify the executive order for debt relief. It was this last reason that the six justices that voted to strike down the relief based their decision.