Supreme Court strikes down Biden’s student debt forgiveness plan

The Supreme Court on Friday blocked the Biden administration’s student debt relief plan in a 6-3 decision, stopping more than 40 million borrowers from receiving loan forgiveness and delivering a major defeat to one of the president’s key campaign promises.

Chief Justice John Roberts, writing for himself and his five conservative colleagues, ruled that Congress had not authorized the executive branch to forgive the debts that are estimated at hundreds of billions of dollars. 

 “The Secretary asserts that the HEROES Act grants him the authority to cancel $430 billion of student loan principal. It does not,” Roberts wrote.

“We hold today that the Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up,” Roberts continued.

The high-stakes decision will likely limit President Biden’s options to deliver on his commitment to cancel $10,000 of student loans for low- and middle-income borrowers. 

“The Secretary asserts that the HEROES Act grants him the authority to cancel $430 billion of student loan principal. It does not,” Chief Justice John Roberts wrote. The court ruled 6-3 along ideological lines.

Biden’s plan would have canceled up to $20,000 in loans for Pell Grant recipients and $10,000 for other borrowers, if the individual’s income is less than $125,000. The income limit was doubled for married couples.

In dissent, Justice Elena Kagan, writing for herself and fellow liberal Justices Sonia Sotomayor and Ketanji Brown Jackson, chastised the majority for exceeding its “proper, limited role.” Kagan read portions of the dissent aloud from the bench, a rare occurrence.

“The right answer is the political branches: Congress in broadly authorizing loan relief, the Secretary and the President in using that authority to implement the forgiveness plan. The majority instead says that it is theirs to decide,” Kagan wrote in dissent.

Anticipation had been building that the court’s conservative majority would strike down the plan. During oral arguments in February, several justices expressed doubt about the Education Department’s authority to unilaterally forgive hundreds of billions of dollars in student debt.

The cases against the program were brought by two groups of challengers: six GOP-led states and two individual borrowers, with both groups arguing that the administration exceeded its authority.

The administration attempted to justify the debt relief by tying it to the national emergency established during the public health crisis from COVID-19.

It cited the Higher Education Relief Opportunities for Students (HEROES) Act, a law Congress enacted after the Sept. 11, 2001, terror attacks as the nation went to war. The legislation gives the Education secretary authority to “waive or modify” federal student aid programs when the secretary deems it necessary in connection with a national emergency.

Despite the justices’ skepticism, a sliver of hope had remained for debt relief advocates that they might find neither set of challengers had legal standing to bring their lawsuits in the first place.

The court unanimously found the two individual borrowers had no legal standing, tossing their challenge in a decision authored by conservative Justice Samuel Alito.

But in a separate decision involving the states, the conservative majority said at least Missouri had standing, citing MOHELA, a major student-loan servicer and quasi-state entity.

While the plan has been in limbo for months, White House officials remained mum on other options. The decision is going to force the administration to be vocal quickly as student loan groups and voters will be raising pressure for Biden to uphold his campaign promise. 

Although the 2024 election is more than a year away, some argue a lack of promised student debt relief will be particularly off-putting to young voters, a key demographic for the Democratic Party. 

And another set of challenges arises, as many in Biden’s own party felt his student loan plan didn’t even go far enough. 

Before Biden announced his student debt relief plan in August, Senate Majority Leader Charles Schumer (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.) urged him to use executive authority to cancel up to $50,000 of debt, which Biden has said numerous times he does not agree with. 

Biden did, however, commit during his campaign to canceling $10,000 of student loans for low- and middle-income borrowers. 

While opponents in his own party stayed quiet on their higher demands when Biden announced his plan in order to show a unified front, that grace period is likely now over. 

Advocates are already displeased with Biden after he made a deal with Republicans to avoid an economic default that included a hard deadline on resuming student loan payments. 

The payments were originally tied to the Supreme Court decision, set to restart 60 days after June 30 or 60 days after the court’s decision, whichever came first.

While advocates were hopeful they could get the pause extended if the court struck down debt relief, Biden and Speaker Kevin McCarthy (R-Calif.) solidified 60 days after June 30 as the end date for the pause in their deal on the debt ceiling, killing any chance for another extension. 

The Department of Education has confirmed interest on student loans will begin in September, while payments will resume in October.

In the administration’s own arguments at the Supreme Court, they said turning back on payments without relief could lead to massive delinquencies. Student loan servicers also have said they do not have the resources they need to ensure a smooth transition to repayments. 

The situation will also be taken advantage of by Republicans, who were given a major win by the Supreme Court as the party opposed any student loan relief from the outset.

Updated 11:07 a.m.