As some federal student loan borrowers across the country prepare to see their loans wiped out following President Joe Biden's debt cancellation plan, some borrowers may be wondering if the effort holds up legally.
The legality of Biden's plan largely depends on who you ask. However, the Biden administration has vehemently defended canceling student loan debt for 20 million people and that the move is legally justified.
For the remaining 55%, Biden's plan will offer more relaxed terms for loan repayment, according to the Biden administration. Those terms include cutting the amount that borrowers have to pay each month in half -- from 10% to 5% of discretionary income -- as well as covering borrowers' unpaid monthly interest, among other efforts.
"The Department of Justice, Office of Legal Counsel and the general counsel's office of the Department of Education have looked at the text of the statute and belief that the action that the Secretary took, the administration took here is legally justified," National Economic Council Deputy Director Bharat Ramamurti said during a press briefing Friday.
"The president was clear from the beginning that he did not want to move forward on this unless it was clear that it was legally available to him," Ramamurti said. "… One of the first things that he did when he came to office was ask for that legal opinion."
The Department of Education, alongside the Department of Justice, released a legal opinion last Tuesday in defense of the groundbreaking administrative move, citing the HEROES Act.
The act provides the Secretary of Education broad authority to grant relief from student loan requirements during specific periods -- such as the ongoing COVID-19 pandemic -- for particular purposes, like addressing financial harms of wars or national emergencies.
"The Secretary of Education has used this authority, under both this and every prior administration since the Act's passage, to provide relief to borrowers in connection with a war, other military operation, or national emergency, including the ongoing moratorium on student loan payments and interest," the opinion reads.
The White House has repeatedly faced questions concerning the future of Biden's plan in court, during a Friday press conference where officials said they expect legal challenges.
A June decision against the Environmental Protection Agency from the Supreme Court cited the "major questions doctrine," which requires Congress to clearly and explicitly grant agencies the authority to employ extraordinary actions. He says this strategy may be used to jeopardize Biden's plan.
"Recent rulings from the Supreme Court suggest that at least some of the justices on the current court could view sweeping executive action like this as running afoul of congressional intent," Adam S. Minsky, a student loan attorney, told ABC News. "But this is not necessarily the same type of case that was recently decided."
"It's going to be up to the courts to decide whether those are valid claims or not, but we believe that we're on very strong legal grounds," Ramamurti said.
Jed Shugerman, a professor at Fordham Law, said he doesn't see the order "surviving a legal challenge."
"My bottom line is that if the Biden administration wants to prevail in an inevitable legal challenge, it needs to switch to the more appropriate statute as the legal basis for this policy (under the Higher Education Act of 1965) or significantly narrow its policy for specific COVID relief claims (and even then, it would be vulnerable)," Shugerman told ABC News.
Minksy said this is uncharted territory, adding that both Biden and former President Donald Trump have used the HEROES Act to pause federal loan payments, interest, and collection since the start of the COVID-19 pandemic.
Biden's plan will erase at least $10,000 in federal student loan debt for Americans who made less than $125,000 per year in the 2020 or 2021 tax year, or less than $250,000 as a household.
For Americans under that same income bracket who took out Pell grants to pay for college, it would erase up to $20,000.
It is unclear when borrowers will see a change in their account balance. The White House says the applications for student debt relief will be launched by early October, with relief beginning to reach borrowers by early to mid-November.