Friday at the Supreme Court rejected President Joe Biden’s plan to eliminate roughly $400 billion in student debt, dealing a major blow to millions of borrowers across the country.
What you need to know
The 6 to 3 conservative majority of the Supreme Court rejected President Joe Biden’s plan to eliminate roughly $400 billion in student debt
Biden’s plan would have eliminated $10,000 in student loans for borrowers with incomes below $125,000 or households with less than $250,000; Pell Grant recipients would have seen up to $20,000 in loans erased
The plan was to affect about 43 million Americans and completely wipe out the balances of about 20 million; Twenty-six million borrowers had already applied to the program In a statement, President Joe Biden hinted that he will announce new actions to address student debt relief later Friday afternoon.
The 6-3 sentence in the ideological line of the high court killed the president’s plan to eliminate $10,000 in federal student loan forgiveness for those with incomes below $125,000 or households with less than $250,000. Pell grant recipients, who come from low-income families, would have been eligible for an additional $10,000 in relief.
The plan was to affect about 43 million Americans and completely wipe out the balances of about 20 million. The Congressional Budget Office had said the program would cost about $400 billion over the next three decades.
Twenty-six million people had already applied to the program. Loan repayments, which have been halted since March 2020 due to the COVID-19 pandemic, will resume at the end of August.
The Biden administration had said it was within its rights to implement the program based on the Higher Education Opportunity Act of 2003, commonly known as the HEROES Act. The law, they said, allows the secretary of education to modify or waive loan provisions during a national emergency, in this case the COVID-19 pandemic.
But the high court ruled that the administration overstepped its authority, with Chief Justice John Roberts writing for the majority that the act “provides no authorization” for the plan.
“Six states sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree,” Roberts wrote for the majority, saying that Education Secretary Miguel Cardona’s amendments, ” they created a new and fundamentally different loan forgiveness program.”
Justice Elena Kagan, one of three dissenting liberals, said the court’s conservative majority “overturns the combined judgment of the legislative and executive branches, with the effect of eliminating loan forgiveness for 43 million Americans”.
“From the first page to the last, today’s opinion turns away from the demands of judicial restraint,” Kagan wrote. “At the behest of an uninjured party, the majority decides a controversial public policy matter that belongs to the politically responsible branches and the people they represent.”
In a statement, President Joe Biden hinted that he will announce new actions to address student debt relief Friday afternoon, calling the Supreme Court’s ruling “wrong.”
“My administration’s student debt relief plan would have been the lifeline that tens of millions of hardworking Americans needed as they try to recover from a once-in-a-century pandemic,” he wrote, saying that the proposal “would have been life-changing for millions of Americans and their families” and “good for economic growth, both in the short and long term.”
“I will stop at nothing to find other ways to bring relief to hard-working, middle-class families. My administration will continue to work to bring the promise of higher education to all Americans,” the president said. “And later today, I will provide more details about everything my administration has done to help students and the next steps my administration will take.”
Republicans applauded the ruling, while Democrats and other advocates urged President Biden to take additional steps to eliminate student debt.
Florida Sen. Rick Scott called Biden’s plan “a publicity stunt” and “unconstitutional,” while Kansas Sen. Roger Marshall called it a “student loan scheme” that was “no more than a bribe to his far-left political base.”
“A president can’t just wave his hand and eliminate student loans he favors, leaving aside all those who worked hard to pay off their loans or made other career choices,” said the former ambassador to UN and 2024 GOP presidential candidate Nikki Haley in a statement. . “The Supreme Court was right to throw out Joe Biden’s takeover.”
Biden charged that “the hypocrisy of Republican elected officials is breathtaking.”
“They had no problem with billions in pandemic-related loans to businesses, including hundreds of thousands and in some cases millions of dollars for their own businesses. And those loans were forgiven,” wrote the president “But when it came to relief for millions of hard-working Americans, they did everything they could to stop it.”
Senate Majority Leader Chuck Schumer, D-N.Y., called the ruling “hypocrisy,” citing recent ethics issues involving some Supreme Court justices.
“As judges accept lavish six-figure gifts, they are not daring to help Americans burdened with student loan debt, but instead aligning themselves with powerful and vested interests,” Schumer said. he wrote on Twitter.
“This fight is not over,” said Massachusetts Sen. Elizabeth Warren, a leading progressive voice in the fight to cancel student loans. he wrote in a statement. “The president has more tools to cancel student debt, and he needs to use them. More than 40 million hard-working Americans are waiting for the help that President Biden promised them, and they are waiting for this administration to throw everything they have into the fight. until they fulfill that commitment.”
“The Supreme Court’s decision to strike down the president’s student debt program is a clear disregard for the needs of millions of Americans, especially black Americans,” wrote NAACP President and CEO Derrick Johnson. in a statement. “Despite today’s upsetting ruling, we demand that the Biden administration follow through on its promise of student loan debt relief.
“Education has long been viewed as a pathway to generational wealth, economic liberation and the security of the American Dream,” Johnson continued. “Let’s be clear: Student debt is killing that dream. The NAACP will not stop until student debt relief becomes a reality. America has so easily forgiven greedy corporations for their debts: why would they refuse to offer the same grace and investment in our own students?”
High court justices expressed skepticism when they heard arguments in two cases challenging Biden’s plan in February. Six Republican-led states challenged the plan, arguing it would have been an unearned “gain” for millions of borrowers.
“Cancelling hundreds of billions of dollars in student loans, through an executive order that extends to nearly all borrowers, is an impressive assertion of power and a matter of great economic and political importance,” say the six GOP-led states: Arkansas, Iowa, Kansas. , Missouri, Nebraska and South Carolina – he said in his legal writing.
The top attorney for the Biden administration argued that some borrowers will be at “risk of default and default due to the ongoing economic consequences of the COVID-19 pandemic.”
Ryan Chatelain of Spectrum News contributed to this report.
