December 1st 2022, the federal Supreme Court rejected President Biden’s immediate request to revive his student debt relief plan. The court will review oral arguments in February 2023 and then determine whether the leading lawsuit against the program has merit.

As the case reaches the highest U.S. court of law, national student loan expert Mark Kantrowitz predicts that the court will rule in favor of the lawsuit and effectively block student loan forgiveness due to a number of legal implications.

While forgiveness isn’t completely off the table, it’s possible that the Supreme Court could rule in favor of the lawsuit. Here are a few things that could lead the court to make this decision and how borrowers should respond.

Court blocks Biden’s immediate revival request, will review legality

The U.S. Supreme Court (SCOTUS) decided that student loan forgiveness will remain blocked until the oral arguments are made and struck down the Biden administration’s appeal to immediately lift the temporary injunction on the plan.

How the court came to this conclusion has not been disclosed, but SCOTUS did reveal that it will stick to lower-court rulings, meaning that borrowers cannot apply or receive forgiveness until an official verdict is reached.

Borrowers and Democratic lawmakers have long argued the plan’s constitutionality, citing little concern over the lower-court rulings. “We remain confident in our legal authority to carry out the Student Debt Relief Program @POTUS & I announced in August, ” stated Education Secretary Miguel Cardona in a November Twitter post.

Confidence in Biden’s legal authority dwindles

However, leading national student loan expert Mark Kantrowitz doesn’t express the same level of confidence in the administration’s legal authority. “This is a court that has already shut down several programs of the Biden administration and even some of the Trump administrations programs for exceeding authority,” he says.

While it’s technically still possible that the court could rule in favor of the plan, Kantrowitz asserts that this outcome is unlikely at best. “I’m quite certain they don’t have the legal authority,” he adds. “I would be really, really surprised if the court upholds the Biden [student debt forgiveness] plan.”

Forgiveness hangs on Biden’s authority, legal standing

In February of next year, the Supreme Court will begin the oral arguments for the lawsuit filed against Biden’s plan by six GOP-controlled states. In late October, the Eighth Circuit Court of Appeals ruled in favor of the case and issued a temporary injunction on the plan.

The three appellate judges ruled in favor of the case on the notion that Missouri would miss out on necessary tax revenue, asserting that it would cause economic harm to the state’s higher education funding, as major federal servicer, MOHELA, is located in the state.

Court must find the lawsuit meritless on account of two questions

The court wrote that it will be evaluating the legal merit of the case against the plan through discussing “(1) whether respondents have Article III standing, and (2) whether the plan exceeds the Secretary’s statutory authority or is arbitrary and capricious.” This means that the judge’s will consider whether the arguments filed by the state attorneys general in the lawsuit have legal standing and whether the plan exceeds the Education Secretary’s jurisdiction. It’s likely that the judge’s decision will be made public sometime during late Spring or early Summer 2023.

Administration’s program review, Hero’s Act may not have legal standing

In the midst of the appeals process, the administration has been steadfast in its confidence of forgiveness. On November 20, the administration sent emails to those who applied for forgiveness when the application was available, notifying them of their eligibility. “Your application is complete and approved, and we will discharge your approved debt if and when we prevail in court,” the email sent to approved borrowers read.

However, Kantrowitz asserts that the administration’s confidence isn’t an indicator of potential forgiveness. “I’ve written extensively that the President doesn’t have this legal authority,” he says, adding that the Major Questions Doctrine is, among other reasons, a way that the court could rule against Biden’s plan.

According to the Doctrine, when something is of great significance, has political implications or financial implications, Congress has to have explicitly authorized it, he explains. “4 hundred billion of [student loan] forgiveness certainly qualifies as a major question.” Congress has approved loan cancellation or discharge programs like PSLF and Teacher Loan Forgiveness, but Kantrowitz says that when it comes to broad forgiveness legislation, “it couldn’t get the votes… they couldn’t get it done within Congress.”

The Heroes Act unlikely to permanently block forgiveness

The administration has also asserted that the 2003 Heroes Act grants them the legal right to forgive debt without an act of Congress. The act states that in the case of a national emergency, the Education Secretary has the power to modify pre existing legislation to ensure borrowers aren’t worse off due to direct economic harm caused by the outcome of the emergency.

According to Kantrowitz, Biden’s forgiveness plan doesn’t satisfy the requirements directly. While the COVID-19 pandemic was a national emergency, the court would have to find that every student loan borrower experienced direct financial harm due to the pandemic.

The inflated economy has been an argument as to how the Secretary can prove direct economic harm, but that claim may not have the basis that lawmakers thought it once did. “That’s not being caused by the pandemic, that’s being caused by the stimulus. In my opinion, these two aspects [the Heroes Act and Major Questions Doctrine] are sufficient for the Supreme Court to block the president’s plan permanently,” he concludes.

Borrowers need to review options, prepare for resumption of monthly payments

While student loan forgiveness is technically still on the table, borrowers need to prepare for every possible outcome to ensure they don’t fall behind financially when payments resume. The administration recently extended the student loan repayment pause in response to the ongoing litigation; payments were set to resume on January 1, 2023 and will now resume no later than 60 days after June 30, 2023.

Now more than ever, federal borrowers need to know the ins-and-outs of their balance and the forgiveness options available to them. Call your servicer as soon as possible with questions to avoid the increased demand for assistance once payments resume. If you’re concerned about your monthly payments resuming, explore the federal forgiveness and payment relief options offered by the Education Department. Repayment options, like income-driven repayment, can significantly reduce your monthly payments and ultimately forgive your remaining debt after making payments for 20 to 25 years.

Borrowers can also apply for hardship forbearance and deferment if you need a little more time to get on your feet once the pause ends. For the latest up-to-date information regarding repayment and student loans, subscribe to the Education Department’s email newsletter and keep an eye out for new information from your loan servicer.