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Supreme Court Votes Against Biden’s Student Debt Plan

Supreme Court Votes Against Biden’s Student Debt Plan

The Biden Administration’s unlawful plan to erase $400 billion in student debt was rejected this Friday by the Supreme Court. 

With a vote of 6-3, the Court’s conservative justices said the Biden Administraiton did not have the authority to cancel such a vast amount of debt without approval from Congress and agreed the HEROES Act did not provide an exception. 

“Six states sued, arguing that the HEROES Act does not authorize the loan cancellation plan,” said Chief Justice John Roberts. “We agree.”

The HEROES Act (signed in 2001) was a response to 9/11 that gave the secretary of education the power to “waive or modify any statutory or regulatory provision” to protect individuals who were impacted by terror attacks. In 2003, the law was amended to include borrowers affected by a war or other national emergency.

In 2020, the Trump Administration utilized the HEROES Act to pause student loan payments and suspend interest to assist borrowers during the coronavirus pandemic. The Biden Administration extended that pause and in 2022 unveiled a plan to forgive $10,000 in student debt for individuals earning less than $125,000 per year and $20,000 for Pell Grant recipients. The pause has already cost the federal government more than $100 billion; Biden’s plan would have cost an additional $400 billion.

As the plaintiffs argued, pausing payments during a national emergency and forgiving $400 billion in debt are two entirely different things.

“Cancelling hundreds of billions of dollars in student loans – through a decree that extends to nearly all borrowers – is a breathtaking assertion of power and a matter of great economic and political significance,” wrote the lawyers representing the six states that sued. The HEROES Act “does not authorize the program, much less with the clarity this court’s precedent requires.” 

Believing that that authority to “waive or modify” student debt allows for massive debt forgiveness would be like saying the “French Revolution ‘modified’ the status of the French nobility,” quipped Justice Roberts. 

In her dissenting opinion, liberal Justice Elena Kagan provided the weak argument that the six states suing had no right to do so because the outcome of the case holds no personal value for them.

“The plaintiffs in this case are six states that have no personal stake in the Secretary loan forgiveness plan,” wrote Kagan. “They are classic ideological plaintiffs: They think the plan a very bad idea, but they are no worse off because the Secretary differs.”

An estimated 43 million borrowers who would have been eligible for debt forgiveness under Biden’s plan can expect to start making payments within a month or two, though the Administration has already introduced alternatives to help ease the transition. Speaking to reporters on Friday, President Biden outlined the actions his Administration is taking to assist borrowers following the Supreme Court ruling. Starting immediately, his Administration plans to:

  • Utilize the Higher Education Act of 1965 to provide debt relief.
  • Provide borrowers a 12-month grace period during which they will not be penalized for late/missed payments. 
  • Offer an income-based plan to low-income borrowers that pauses payments for individuals making less than 225% of the federal poverty level, limits the ways in which interest can accumulate, reduces the amount borrowers must pay towards undergraduate loans from 10% of their discretionary income to 5%, and forgives balances on loans of $12,000 or less after 10 years of payments instead of 20. 

“The Supreme Court’s decision to strike down student debt relief was a mistake, it was wrong,” said Biden. “It will take longer, but it’s the best path that remains…We’re not going to waste any time on this.” 

Sources:

What is the HEROES Act? 

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

Student loans: Biden unveils Plan B after Supreme Court strikes down forgiveness 

Supreme Court kills Biden’s student debt plan in a setback for millions of borrowers 

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1 Comment

  1. Jpop

    Dear YoungFolks: When are you gonna learn that the Government is not your friend? What they promise you, are always empty promises.

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