Supreme Court takes up Biden's proposal to expand relief for borrowers defrauded by schools

The Supreme Court decided Friday to take up the Biden administration’s appeal defending its proposal to ease applications for the Borrower Defense student debt relief program.  

In a brief order, the justices agreed to review an appeals court ruling that favored a challenge brought by an association of schools in Texas that argue the administration was not authorized to expand the program.

The court’s order grants the case in time to potentially be heard this term, which would result in oral arguments being held this spring and a decision by early summer. 

The Biden administration looked to make borrowers have an easier time applying for Borrower Defense around the same time the president was fighting for universal forgiveness. 

The Borrower Defense program allows individuals who were defrauded by their school to receive loan forgiveness. Notable examples include Corinthian Colleges and ITT Technical Institute.  

Borrowers have been defrauded through tactics such as providing inflated job placement numbers or deceptive recruiting tactics.  

The Department of Education argued to the high court the plaintiffs, Career Colleges and Schools of Texas, do not have standing and the new rule is legal under the Higher Education Act. 

“The Education Act also makes clear that the Department may assess borrower defenses in administrative proceedings invoked by a borrower’s request. Indeed, Congress necessarily would have understood that the agency would assess borrower defenses,” a petition by the government read in October 2024. 

Meanwhile, the Texas group said the federal government has gone beyond the scope of its powers.

“The courts play an important role in ensuring that administrative agencies heed the limits that Congress has placed upon them,” the group said in December.  

The Borrower Defense program has been through political ping pong as the Obama administration created a formal application for the program, the Trump administration restricted parts of the program, and Biden aimed to expand it again.  

So far, President Biden has given out $28.7 billion of student debt relief for more than 1.6 million borrowers through the Borrower Defense program.