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The Supreme Court, in a ruling on Friday, stated that the Biden administration’s program to provide student loan debt relief cannot proceed.
The court, with a majority vote of 6-3, concluded that federal law does not grant the Secretary of Education the authority to cancel more than $430 billion in student loan debt. Chief Justice John Roberts, speaking for the majority, noted that the Secretary’s plan erased the debts of 20 million borrowers and reduced the median amount owed by the remaining 23 million.
Six states filed a lawsuit arguing that the HEROES Act does not authorize the loan cancellation plan, a view the court agreed with.
President Biden strongly disagrees with the court’s decision and is expected to announce new measures later today aimed at safeguarding student loan borrowers, according to a White House insider.
Biden’s Department of Education has devised alternative strategies in the event of an unfavorable Supreme Court ruling, with the intention of blaming Republicans for obstructing the relief he promised to provide.
The student loan initiative proposed by Biden, which had been put on hold due to ongoing legal proceedings, entailed the federal government granting up to $10,000 in debt relief, and up to $20,000 for Pell Grant recipients, to individuals earning less than $125,000 annually.
The estimated cost of the program to the government exceeded $400 billion.
Republicans argued that Biden did not possess the authority to unilaterally forgive student loans. The Congressional Budget Office projected that Biden’s plan would result in an expense of approximately $400 billion to taxpayers.
Republicans expressed outrage at this figure, contending that loan forgiveness would be unfair to those who paid for their own education, repaid their loans, or did not attend college at all. The Supreme Court deliberated on two separate challenges related to the law.
In the case of Department of Education v. Brown, the court ruled that a pair of private borrowers lacked the standing to challenge the loan forgiveness plan.
The more significant case, Biden v. Nebraska, witnessed six states filing a lawsuit against the loan forgiveness scheme. The court found that at least one state, Missouri, had standing to sue due to potential financial implications.
Biden’s administration had relied on the HEROES Act, a federal statute, to implement the plan, claiming that it granted the secretary of education the power to modify statutory or regulatory provisions in connection with a national emergency.
However, the court majority rejected this argument, stating that the authority to modify regulations allows for slight adjustments, not a complete transformation.
Chief Justice Roberts stated that the Department of Education’s modifications created a loan forgiveness program vastly different from what Congress originally intended.
This program effectively granted loan forgiveness to nearly all borrowers in the country, which exceeded the bounds of a mere waiver or modification.
The three liberal justices on the court dissented from the decision. Justice Elena Kagan, in her dissent, criticized the majority for disregarding the combined judgment of the Legislative and Executive Branches, resulting in the elimination of loan forgiveness for 43 million Americans.
Meanwhile, Biden’s Education Department had already been exploring alternative methods of providing relief in anticipation of an unfavorable ruling.
Republicans also introduced their own plan in June, consisting of five bills, that aimed to address student loans and high college costs.
The Republican proposal supports programs that inform students about the actual cost of college and discontinues loans for programs lacking sufficient earning potential.