The Supreme Court heard arguments this week in the case of the Biden administration's student loan forgiveness plan. Court challenges to the scheme were brought by an alliance of six federal states as well as two plaintiffs and a conservative organization from Texas and wound up at the country's highest court. The Biden administration has argued that a 9/11-era law, the Heroes Act of 2003, gives it the authority to cancel $10,000 - in some cases as much as $20,000 - of student debt per borrower as a modification in a time of crisis to protect debtors from harm. Opponents meanwhile are saying that a cancellation is outside of the scope of a modification. The ruling on the cancellation that is expected to cost around $400 billion and that more than 40 million Americans have already applied for is expected in mid-2023.
Numbers by the Federal Student Aid office show that a forgiveness of $10,000 would free at least 12.8 million Americans of their federal student loan debt completely. A forgiveness amount of $20,000 would render at least 21.1 million former students debt-free - around half of all debtors with direct, FFEL and Perkis loans from the Department of Education loan office.
The data also shows that around five million Americans are currently on default for their federal student loans. While around 18 million borrowers were in repayment in as of early 2020, the pausing of student loans during the coronavirus pandemic lead to this number dwindling to just 400,000 by the end of the fiscal year 2022.
