A new proposal from the Biden administration would reduce payments for millions of people who took out student loans, and could cancel up to $1,442,000 of the debt depending on the outcome of the U.S. Supreme Court hearing scheduled for March 28.
The debt forgiveness plan announced in August would cancel $10,000 in federal student loan debt for those earning less than $125,000 or households with less than $250,000 in annual income. Pell Grant recipients* would receive an additional $10,000 of forgiven debt. *Pell Grants are a key federal aid program that helps students from low-income families pay for college.
The Biden administration argues that the Student Higher Education Aid Opportunities Act, better known as the Heroes Act, gives the executive branch the power to cancel federal student loan debt in the event of a national emergency, including the COVID-19 pandemic.*
This law, originally enacted after the terrorist attack of September 11, 2001, was intended to prevent service members from being worse off financially while fighting in wars in Afghanistan and Iraq.
The lawsuit was filed by six Republican-led states that say they would be financially harmed if the debt forgiveness program goes into effect. The other case was filed by two students in Texas who do not fully qualify for debt forgiveness under the program.
Whether or not the debt is canceled will bring changes, as determined by the court's decision. While federal student loan payments are currently suspended, this will end 60 days after the case is resolved. If the case is not resolved by June 30, payments will resume 60 days after that date.
The White House says 26 million people have applied for debt relief, and 16 million have already received it. The Congressional Budget Office has said the program will cost approximately $1.4 trillion over the next three decades.
It is not clear exactly when the Supreme Court will issue its decision, but justices normally publish their rulings at the end of the current term, which is usually in late June or early July.
Sources: CNN en Español, Telemundo 52