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1 1 (July 5, 2023)

handle is hein.crs/govemdc0001 and id is 1 raw text is: \Congressional ______ R esearch Service Supreme Court Invalidates Student Loan Cancellation Policy Under the HEROES Act July 5, 2023 On June 30, 2023, the Supreme Court decided two cases concerning the Department of Education's (ED's) plan to cancel up to $20,000 of outstanding federal student loan debt for certain borrowers. In Biden v. Nebraska, the Court held that the State of Missouri had standing to challenge the loan cancellation policy and that the policy exceeded the Secretary of Education's (Secretary's) statutory authority under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES) Act to waive or modify laws and regulations applicable to student financial assistance in Title IV of the Higher Education Act (HEA) in response to a national emergency. In a companion case, Department of Education v. Brown, the Court held that individual borrower plaintiffs lacked standing to challenge ED's promulgation of the cancellation policy without having followed certain public-participation procedures. This Sidebar summarizes the Court's analyses in these two cases, as well as the potential implications of the Court's holdings. The Cancellation Policy As described in this CRS report, the Court's two decisions arise from a student loan cancellation policy announced by the Biden Administration on August 24, 2022. Under that policy, ED proposed to cancel up to $20,000 of certain federal student loan balances for borrowers with adjusted gross incomes in 2020 or 2021 below $125,000 (for individuals or for married borrowers who file federal taxes separately) or $250,000 (for married couples filing jointly). For borrowers who met this income requirement, their status as Pell Grant recipients (a type of federal student financial assistance for individuals who show financial need) would have determined the amount of cancellation benefits they would receive. While all eligible borrowers would have seen up to $10,000 in cancellation benefits, eligible borrowers who received a Pell Grant at any point would have received up to an additional $10,000 for up to $20,000 in total benefits. Not all federal student loans would have been eligible for cancellation. Among others, loans made under the Federal Direct Loan Program (FDLP) would have been eligible. FDLP loans compose the largest share of the federal student loan portfolio, accounting for $1.4 trillion of ED's $1.6 trillion loan portfolio as of December 31, 2022. In support of this cancellation policy, the Secretary cited his authority under the HEROES Act. The relevant provision of the HEROES Act authorizes the Secretary to waive or modify any statutory or Congressional Research Service https://crsreports.congress.gov LSB10997 CRS Legal Sidebar Prepared for Members and Committees of Congress

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