Texas Borrowers Brace as Student Loan Forgiveness May Not Happen

Around 40 million student debt borrowers could see up to $20,000 of their debt relieved through President Biden's student loan forgiveness plan.
Around 40 million student debt borrowers could see up to $20,000 of their debt relieved through President Biden's student loan forgiveness plan. Screenshot
Prior to completing his undergraduate degree in political science and economics, 28-year-old Solomon Grimm had already accrued $25,000 in student loans.

“I moved around a lot; I started out at Baylor but it was too expensive,” Grimm said. "Then I got to Sam Houston and transferred to Lamar University, in between I got a couple cheaper basic credits from a community college in Brazoria.”

Despite making these budget cuts throughout the process, the Beaumont resident, like 43.5 million other Americans, faced mounting student debt and education that came with a hefty price tag.

“I was almost in default at that point, and I was really struggling,” Grimm said. “I got sent a letter from Attorney General Ken Paxton’s office basically saying that if I didn’t get this debt sorted out, they would pursue legal action.”

At the time, Grimm did not know that because he had cerebral palsy — a congenital disorder that affects movement, muscle tone and posture — that he qualified for total and permanent disability. He came across this clause that would relieve his debt when reviewing his loan agreements and applied for it.

“I guess I was very fortunate because my disability application happened to go right through before I hit default,” Grimm said. “If I had not made it before default hit, the disability wouldn’t have worked to cover any of my debt because it would’ve no longer been held by the university, but by debt collectors.”

Though Grimm’s student debts have been expunged, he closely monitored the Supreme Court’s hearings earlier this week over President Biden’s student loan forgiveness plan, as two of his siblings are still tackling their own debt.

Announced in August, this plan aims to assist working and middle-class federal student loan borrowers by allowing those who have an individual income below $125,000 or a total household income below $250,000 eligible for up to $20,000 in debt relief.

The amount forgiven is also based on whether a borrower has Pell grants — which are grants given to low-income undergraduate and graduate students that do not have to be repaid. If a borrower has Pell grants, they qualify for the $20,000 in forgiveness; however, if they don’t have these grants a borrower qualifies for $10,000 in debt forgiveness, according to the U.S. Department of Education.
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Crowds of current students and borrowers gathered outside of the Supreme Court hearing to show their support of the loan forgiveness plan.
The Supreme Court heard two cases against the enactment of the plan — Biden V. Nebraska and the Department of Education V. Brown — lawsuits from six states and two individuals respectively.

The six states suing including Nebraska, Arkansas, Kansas, South Carolina, Iowa and Missouri are claiming that Biden does not have the authority to enact a plan like this which proposes the opportunity for total debt cancellation for some borrowers.

The two people suing, Myra Brown and Alexander Taylor, are suing claiming the plan is unfair. In Brown’s case it is because the proposal only takes in federally held loans, not the private ones she holds. Taylor is suing because he didn’t get a Pell grant, which would keep him from qualifying for the extra $10,000 allotted for that.

During the hearings, debate ensued between Solicitor General Elizabeth Prelogar, who is representing the Biden administration, and Chief Justice John Roberts and his fellow conservative justices over Biden’s authority to enact the program.

Biden is claiming under the HEROES Act, that the Secretary of Education has the right to waive or modify student debt relief as the pandemic has caused borrowers to struggle with increased financial hardships.

However, conservative justices are against this notion stating that though the act does give authority to waive or modify it does not give the ability to entirely cancel some debt altogether, said Dr. Alex Badas, assistant professor of political science at the University of Houston.

“A few of the conservative justices argue that the language of waive or modify does not mean outright cancellation and if Congress intended there to be cancellation, they would’ve specifically mentioned it,” Badas said.

Though the justices are claiming that this plan provides full debt cancellation — which is true for some borrowers — it will not provide this cancellation to 48 percent of the population whose student debt amounts to more than $20,000, Badas said.

In the hearing, Prelogar said that this plan would help 40 million borrowers alleviate the financial burden that student loan debt is placing on them.

According to Badas, the states that are suing against this proposed assistance are making a claim that Biden is over-extending his executive power to enact a program with this extent of financial and policy commitment without the express consent of Congress through the Major Questions Doctrine.

From the questions that they were asking during the hearings, Roberts and fellow conservative justice Clarence Thomas seem to be more in agreement with the states’ argument; that Congress needs to assert their authority and not just allow Biden to put it into place, Badas said.

In contrast, it appears that liberal justice Sonia Sotomayor and Elena Kagan believe that if Congress had not approved Biden’s plan it would’ve stated its direct opposition to it, Badas said.

Mark Jones, Rice University political science professor said another key part to consider for both cases is how the HEROES Act should be applied.

“Another element aside from Congress’s approval to really consider is whether the HEROES Act even grants the legislative approval for Biden to make this half a trillion-dollar expenditure,” Jones said.

Though it appears as if the states have the conservative justices’ support to grant their standing, the Supreme Court will have to determine the standing for the individuals suing, Jones said.

“The other critique, particularly on the liberal side of the argument, is whether the states or individuals have standing to be pursuing this litigation against the Biden administration,” Jones said.

Jones said he anticipates the states will be granted standing because of the conservative supermajority on the court. In terms of Brown and Taylor’s standings, Jones said it is unlikely for them to be granted the same from either the conservative or liberal jusges since their claims are based on claims that the implementation of the plan would be unfair, which makes a weak argument.

If for some reason the justices do not grant standing to either party, there could be additional lawsuits. One that was mentioned with the potential to have some standing could come from Missouri’s Higher Education Loan Authority.

According to Jones, this state-created entity operates independently from the state of Missouri and therefore could be granted standing on the basis that it would lose income if debts were forgiven. If accepted by the court, there's a good chance that arguments about student loan forgiveness would be further extended.

“I wouldn’t expect this debt to be forgiven this year, I think the best the individuals suing can hope for is that the case will continue rather than the Supreme Court ruling against the Biden Administration,” Jones said.

As for Grimm, he continues to worry about the amount of debt his brother and sister have accrued.

“All three of us accrued quite a lot of debt, my brother has between $20,000 to $30,000 and is unable to make a dent in them because the interest on them is greater than the payments,” Grimm said.

Grimm’s sister, who has a bachelor’s degree, is just now in the financial position to start slowly paying off her debts, he said.

According to Grimm, the debt relief would help them have disposable income to contribute to the economy, “They can’t purchase anything because a lot of places won’t let you try if you have debt,” Grimm said. “If their debt-to-income ratio is too out of balance, they can’t buy a car or get a house or anything like that.”

Badas has noticed this trend of borrowers holding off on making financial commitments due to the uncertainty of their loan payments.

“We see a lot of people putting off buying houses or even having children because of the uncertainty they’re facing with their student loans,” Badas said. “The financial hardships may be felt a little harder here in Houston, where there’s other kinds of economic situations like housing cost increases as our population continues to grow.

Badas also said the impact of student debt hits Houston particularly hard because these debts disproportionately affect minorities and Houston has larger minority populations, when compared to other cities.

“If we are looking at Houston, it is a very diverse city and there are a lot younger people with student loans than other places in the country,” Badas said.

Grimm is skeptical that Biden’s current proposed plan will be passed in the Supreme Court but does anticipate that it may open the door for some negotiation for policy change or reform to the way student debt is handled.

“We can’t continue on having entire generations of students deadlocked in a significant amount of debt, we aren’t paying $5,000 for a whole academic year like back in the day,” Grimm said. “Now we are paying $20,000 for a semester, there is a significant difference, and that difference needs to be addressed.”
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Faith Bugenhagen is on staff as a news reporter for The Houston Press, assigned to cover the Greater-Houston area.