Supreme Court likely to strike down Biden’s plan for student-loan forgiveness, analysts say
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As the U.S. Supreme Court prepares to rule on President Joe Biden’s plan to cancel a big tranche of federal student loans, analysts say it’s likely the high court will nix it.
“Most of our contacts say that the probability of the student loan plan surviving the courts is no better than 1 in 3,” said BTIG analysts Isaac Boltansky and Isabel Bandoroff in a recent note.
The high court, which has a 6-3 conservative majority, has “taken steps to steadily curtail the administrative state,” the BTIG team added.
An analyst for Capital Alpha Partners, Ian Katz, said in a note that “there’s a widespread belief that this is a slam-dunk case for the conservative Supreme Court to rule against the Biden administration.”
But Katz isn’t quite as bearish as that consensus view, telling MarketWatch on Monday that he puts the chances for a Biden defeat at only 60%.
The first question the Supreme Court justices will look to answer is whether the parties opposing Biden’s forgiveness plan have standing, or the right to bring a lawsuit, notes MarketWatch’s Jillian Berman.
If the court finds the plaintiffs have the right to sue, then it will consider the merits of the case, or whether the law gives the Biden administration the power to cancel student debt.
See: What you need to know about Tuesday’s student-debt relief Supreme Court showdown
“The main doubts for the plaintiffs, I think, is the possibility that the court could decide that the plaintiffs don’t have standing,” said Capital Alpha’s Katz.
Biden made his long-awaited announcement on federal student loans in August, saying his administration plans to cancel $10,000 in debt per borrower for individuals making under $125,000 a year or households making less than $250,000.
With November’s midterm elections nearing, he also announced forgiveness of up to $20,000 per borrower for Pell grant recipients.
The court likely won’t issue its decision until June, but the nine justices could reveal their leanings when attorneys present their oral arguments on Tuesday.
Now read: Justice Thomas wrote of ‘crushing weight’ of student loans
And see: Canceling student debt unlikely to stand up in court, ex-Education Department lawyer says
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