3 big questions the Supreme Court is likely to ask when determining the fate of student loan forgiveness

With President Joe Biden‘s sweeping student loan forgiveness plan on hold, tens of millions of Americans who borrowed for their college education remain in the dark about the future of their debt.

It’s hard to overstate the consequences of that uncertainty: Student debt makes it harder for people to buy houses, start families and businesses, and save for their old age.

Now, the nine justices of the Supreme Court have agreed to weigh in on the policy. The nation’s highest court will hear legal arguments around the president’s plan, which faces at least six lawsuits, on Feb. 28.

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“The benefit of the Supreme Court ruling is that it will settle, for now, all of the litigation related to the loan forgiveness,” Dan Urman, a law professor at Northeastern University, said in an earlier interview with CNBC.

Here are the three key questions the court is likely to consider, according to experts.

The main obstacle for those hoping to challenge student loan forgiveness has been finding a plaintiff who can prove they have been harmed by the policy.

To establish so-called legal standing, the suing parties generally have to prove they’d be injured by the policy in question, said Laurence Tribe, a Harvard law professor.

The Supreme Court has already made clear that it will consider the issue of standing at the end of February, pointing in a brief to standing as a question presented.

In one of the lawsuits the highest court will consider, six GOP-led states argue that forgiveness will hurt the profits of companies in their states that service federal student loans. The other legal challenge contains two plaintiffs who say they’ve been harmed by the policy by the fact that they are partially or fully excluded from the relief.

Higher education expert Mark Kantrowitz doesn’t believe any of the plaintiffs have successfully proven injury by student loan forgiveness. However, he added, that doesn’t mean they’ll fail.

“The U.S. Supreme Court can decide to consider the case on the merits regardless of legal standing,” Kantrowitz said. “That would be a break from standard practice, but this court has demonstrated a willingness to break with precedent.”

At an estimated cost of around $400 billion, Biden’s plan to forgive student debt is one of the most expensive executive actions in history. The justices are likely to examine whether the president has the power to implement such a sweeping policy.

The Biden administration insists that it’s acting within the law, pointing out that the Heroes Act of 2003 grants the U.S. secretary of education the authority to make changes related to student loans during national emergencies. The country has been operating under an emergency declaration due to Covid since March 2020.

However, opponents of the policy say the administration is incorrectly using the law, which was passed after the Sept. 11 terrorist attacks.

“It is not an across-the-board get-out-of-debt provision that an administration can invoke at will,” the six Republican-led states wrote in their lawsuit.  

Biden officials point out that the public health crisis has caused considerable financial harm to student loan borrowers and that its debt cancellation is necessary to stave off a historic rise in delinquencies and defaults.

Tribe expects that the justices will visit the so-called major questions doctrine in deciding the fate of Biden’s student loan forgiveness plan. Under this doctrine, the Supreme Court looks to see if a government agency acting on an issue with significant national consequences has been clearly supported by congressional law.

And so the justices may examine whether the Heroes Act, which the Biden administration is citing as its legal permission to pass forgiveness, actually allows the president to cancel student debt in the specific way he is hoping to.

The use of the doctrine has become more prominent in recent years, which Tribe finds concerning.

“They’re requiring a level of specificity that’s incompatible with the way the legal process works,” Tribe said. “It reaffirms the notion that the Supreme Court is prepared to expand its own power at the expense of everyone else: the executive branch, the legislative branch, administrative agencies and individual citizens.”