Here’s an explainer on student loans and the Supreme Court, plus what to do about your debt, for now


As the oral arguments around President Joe Biden’s student loan forgiveness plan unfolded at the Supreme Court last week, activists, borrowers and experts packed the courtroom, while protestors gathered outside

“It was the Super Bowl for student loan nerds,” says Betsy Mayotte, founder and president of The Institute of Student Loan Advisors, of the arguments — which lasted nearly two hours longer than scheduled. “But the problem is, we don’t know the outcome of the game for a long time.”

A decision is expected by late June. Between now and then, the nine justices will evaluate two key lawsuits and determine if some 40 million Americans will see up to $20,000 of federal student debt erased.

Here are four key takeaways from the arguments, according to academics, lawyers, student loan experts and activists.

1. Standing could determine the Supreme Court ruling 

Much of the oral arguments centered on legal standing, which is the right of a party to bring a lawsuit to court. In the first case, Biden v. Nebraska, several justices questioned whether Missouri — one of six states suing — had the right to bring a case on behalf of Mohela, an independent state-created student loan servicer. 

“Usually, we don’t allow one person to step into another’s shoes and say, ‘I think this person suffered harm’ even if that harm is very great,” said liberal Justice Elena Kagan.

In the second case, Department of Education v. Brown, the justices questioned if the two plaintiffs — individuals who claim they weren’t eligible for part or all of the relief — were harmed by not having the opportunity to participate in a notice-and-comment period for the program.

In the Mohela case, the federal government is “essentially arguing that the scope is too broad” and in the second case, it’s “arguing that the scope is too narrow,” Dominique Baker, an associate professor of education policy at Southern Methodist University, said in a post-arguments discussion hosted by the Brookings Institution, a left-leaning think tank. “I think what is too broad and what is too narrow is really a subjective question, and so ultimately, we are going to rely on nine people’s definitions of a subjective question.”

The court only needs to find one plaintiff has standing to begin evaluating the legality of Biden’s plan.

Learn more: What you need to know about Tuesday’s student-debt relief Supreme Court showdown

2. Dissecting the meaning of ‘waive or modify’ 

The court’s decision on the legality of Biden’s plan could come down to the wording of the HEROES Act of 2003, a law passed by Congress following the 9/11 attacks.

In particular, observers were struck by the number of questions that justices asked about two words in the act: “waive” and “modify.”

“The Secretary of Education may waiveormodify any statutory or regulatory provision applicable to the student financial assistance programs,” the law reads. This provision is applicable “as the Secretary deems necessary in connection with a war or other military operation or national emergency.”

The White House argues this sentence allows debt cancellation due to the pandemic, but some justices seemed skeptical.

“When we start thinking about the merits of the case, quite frankly, this is going to hinge a lot on how the justices view a waiver and a modification,” Baker said.

“The government has interpreted the word ‘modify’ to mean rewrite,” said Sheng Li, litigation counsel at the New Civil Liberties Alliance, a conservative think tank, during a Wednesday seminar. “Congress has been very careful in crafting statutes that cancel debt. And when they craft such statutes, they make it very clear that this is a statute that allows the secretary to cancel debt, and creates very explicit conditions.”

Also see: MarketWatch Q&A with National Economic Council’s Bharat Ramamurti on student loans, Social Security and more

3. A strong performance by the U.S. solicitor general

Several experts praised U.S. Solicitor General Elizabeth Prelogar’s performance arguing the back-to-back cases on behalf of the White House. Born and raised in Idaho, Prelogar has a master’s in creative writing, a Harvard law degree and years of experience as a Justice Department attorney. Biden appointed her as the fourth-ranking individual at the Justice Department in 2021.

“I think the solicitor general did an excellent job standing up for borrowers, highlighting the impact of the pandemic on student loan borrowers and showing how if cancellation doesn’t happen, there’s going to be a wave of defaults and delinquencies,” Persis Yu, deputy executive director and managing counsel of the borrower advocacy group Student Borrower Protection Center, said from the steps of the courthouse minutes after arguments concluded.

“Prelogar knocked it out of the park,” University of Illinois Chicago law professor Steven Schwinn told CNBC. “I do think she could have influenced or even changed the thinking of two justices, maybe more.”

Read more: ‘I’m holding my breath’: What will happen if the Supreme Court blocks Biden’s student-loan forgiveness plan?

4. Don’t make financial decisions based on Supreme Court arguments 

After a monthslong legal tussle over Biden’s student debt cancellation plan, the oral arguments don’t change the frustration felt by scores of borrowers. 

People feel like “it’s been this game of cat-and-mouse for so long, so why am I even getting my hopes up at this point?” says Kristen Ahlenius, director of education at workplace financial wellness company Your Money Line, who frequently works with public schoolteachers and other borrowers with higher-than-average student debt burdens.

Don’t let your frustrations keep you from planning ahead. “Borrowers need to take action to make sure they’re in the best position possible,” Yu said.

Student debt cancellation isn’t guaranteed, and there likely won’t be a Supreme Court ruling until late June. Under current guidance, payments will resume 60 days after June 30, or 60 days after the high court’s decision — whichever comes first. Call your loan servicer, understand what your monthly payment could be and put aside money now if you can.

Plus: Your easy step-by-step guide to paying off all kinds of debt

“I’m seeing borrowers who are forming their own opinions based on what they heard or what they read. I am seeing some say ‘slam dunk,’ and I’m seeing others saying this will get struck down,” Mayotte says. “Some borrowers are taking action based on what they heard today, but I think that’s a mistake. I don’t think we know until we know.”

More From NerdWallet

Eliza Haverstock writes for NerdWallet. Email: Twitter: @elizahaverstock.




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