Supreme Court Rejects Biden’s $400 Billion Student Loan Debt Relief Plan

by Chloe Baker
student loan debt relief

In a closely divided decision, the Supreme Court effectively thwarted President Joe Biden’s ambitious $400 billion proposal to alleviate or reduce federal student loan debts for millions of Americans.

With conservative justices in the majority, the 6-3 ruling concluded that the Biden administration had exceeded its authority with the plan, leaving borrowers responsible for repaying their loans, which are set to resume in the coming fall.

According to a White House official, President Biden intended to unveil alternative measures to safeguard student loan borrowers and address the court’s decision. The official, speaking on condition of anonymity, noted that Biden’s response to the case would be shared later on Friday.

The court determined that the administration required Congress’s endorsement before implementing such a costly program, dismissing arguments that the HEROES Act, a bipartisan 2003 law governing student loans, granted Biden the authority he claimed.

Chief Justice John Roberts, writing for the court, stated, “Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree.”

The Education Department has announced that loan repayments will recommence in October, with interest accruing from September onward. Payments had been suspended since the onset of the COVID-19 pandemic over three years ago.

Under the forgiveness program, individuals earning less than $125,000 or households with incomes below $250,000 would have had $10,000 in student loan debt canceled. Pell Grant recipients, who typically exhibit greater financial need, would have qualified for an additional $10,000 debt forgiveness.

The administration estimated that 43 million individuals would have been eligible for relief, with 26 million already applying. The program’s cost over 30 years was projected at $400 billion.

Advocacy groups supporting debt cancellation criticized the court’s decision and urged President Biden to explore alternative avenues for fulfilling his promise of debt relief.

Natalia Abrams, president and founder of the Student Debt Crisis Center, stated that the responsibility for taking new action falls solely on Biden’s shoulders. “The president possesses the power, and must summon the will, to secure the essential relief that families across the nation desperately need,” Abrams emphasized in a statement.

The loan forgiveness plan now joins other pandemic-related initiatives that have faced setbacks at the Supreme Court. Conservative majorities terminated the eviction moratorium imposed by the Centers for Disease Control and Prevention, blocked a mandate for vaccination or regular testing for workers at large companies, and upheld a requirement for healthcare worker vaccinations.

The earlier programs were predominantly presented as public health measures aimed at curbing the spread of COVID-19. In contrast, the loan forgiveness plan sought to address the pandemic’s economic repercussions.

During over three hours of arguments in February, conservative justices expressed skepticism regarding the administration’s authority to cancel or reduce loans held by millions of individuals.

States led by Republican governors contended that the plan would have bestowed a “windfall” upon 20 million people, erasing their entire student debt and leaving them better off than before the pandemic.

Chief Justice Roberts, among others on the court, questioned whether non-college-educated workers would be disadvantaged by a break given exclusively to college graduates.

The administration grounded the need for comprehensive loan forgiveness in the COVID-19 emergency and its ongoing adverse effects on individuals near the lower end of the economic spectrum. However, the declared emergency ended on May 11.

The administration’s top Supreme Court lawyer warned the justices that, without the promised loan relief, delinquencies and defaults would surge.

During the arguments, Justice Sonia Sotomayor cautioned her colleagues that they would be mistaken in assuming the right to decide the extent of aid given to individuals who would struggle if the program were struck down, rather than leaving that decision to education experts.

The HEROES Act authorized the secretary of education to waive or modify the terms of federal student loans during a national emergency, primarily aimed at safeguarding service members from financial hardship during the wars in Afghanistan and Iraq.

Although Biden initially doubted his authority to broadly cancel student debt, he announced the program in August. Legal challenges swiftly followed.

The court majority determined that the Republican-led states had surmounted the initial obstacle of demonstrating that they would suffer financial harm if the program were implemented.

The states did not rely on any direct injury to themselves but instead highlighted the potential revenue loss of the Missouri Higher Education Loan Authority (MOHELA), a state-created company that services student loans.

Nebraska Solicitor General James Campbell argued in February that MOHELA would experience a 40% decline in revenue if the Biden plan were enacted. However, independent research suggests that MOHELA would still see increased revenue even if Biden’s cancellation took effect. This information was not part of the court record.

In a separate case, the justices unanimously ruled that two Texans who had filed a challenge lacked legal standing to sue. Nevertheless, the outcome of that case does not impact the court’s decision to block the debt relief plan.

AP writers Collin Binkley and Colleen Long contributed to this report.

Follow the AP’s coverage of the Supreme Court at https://bigbignews.net/us-supreme-court

Frequently Asked Questions (FAQs) about student loan debt relief

Q: What was the Supreme Court’s decision regarding Biden’s plan to cancel student loan debt?

A: The Supreme Court, in a 6-3 decision, rejected President Biden’s $400 billion plan to cancel or reduce federal student loan debts. The conservative justices ruled that the Biden administration exceeded its authority with the plan, leaving borrowers responsible for repayments.

Q: What was the basis of the Supreme Court’s decision?

A: The majority of the court held that the administration needed Congress’ endorsement before implementing such a costly program. They rejected arguments that a bipartisan 2003 law, known as the HEROES Act, granted President Biden the power to carry out the loan cancellation plan.

Q: When will loan repayments resume?

A: Loan repayments are expected to resume in October, with interest accruing from September. Payments had been on hold since the beginning of the COVID-19 pandemic.

Q: What were the key provisions of the forgiveness program?

A: Under the program, individuals making less than $125,000 or households with incomes below $250,000 would have had $10,000 in student loan debt canceled. Pell Grant recipients, demonstrating greater financial need, would have qualified for an additional $10,000 in debt forgiveness.

Q: How many people would have been eligible for loan relief?

A: The administration estimated that 43 million individuals would have been eligible for relief, and 26 million people had already applied for it. The program’s cost was projected to be $400 billion over 30 years.

Q: What are advocacy groups saying about the decision?

A: Advocacy groups supporting debt cancellation have condemned the Supreme Court’s decision and are urging President Biden to find alternative ways to fulfill his promise of debt relief. They emphasize that the responsibility for taking new action falls on the President’s shoulders.

More about student loan debt relief

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DebtWarrior123 June 30, 2023 - 5:59 pm

I can’t believe the Suprem Crt sided with the conservs on this one! Biden’s plan would’ve been a game changer for millions of Americans buried in student loan debt. It’s such a disappntmnt to see borrowers left hanging like this.

WordWizard July 1, 2023 - 4:04 am

This text seriously needs a grammar check! There are so many typos and spelling mistakes. Who rly ryt this? Can’t take it seriously with all these errors!

PolicyNerd21 July 1, 2023 - 5:06 am

The Supreme Court ruling highlights the ongoing battle over the balance of power between the executive and legislative branches. It’s a setback for Biden’s ambitious student loan debt relief plan, but the debate on the government’s authority in addressing this issue is far from over.

LilMissGrammarPolice July 1, 2023 - 2:12 pm

wow, this article is a mess! Supreme court kills Biden’s plan to wipe away 400bil in student loan debt, what a bummer! I mean, come on, how can they say he overstepped his authority? That’s just not right.

John123 July 1, 2023 - 4:03 pm

wow, ths Supreme Court rejected Biden’s plan to cancel $400 billion in student loan debt! wth? dnt borrowers nd relief afta ths pandemic mess?


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