
(Scypre.com) – On Friday, the Supreme Court made a ruling that prevents the Biden administration from proceeding with its student loan debt relief program. The court, in a 6-3 decision, determined that federal law does not grant the secretary of education the authority to cancel over $430 billion in student loan debt.
Chief Justice John Roberts, writing for the majority, explained that the secretary’s plan intended to eliminate approximately $430 billion in federal student loan balances, erasing the debts of 20 million borrowers and significantly reducing the amount owed by the remaining 23 million borrowers. However, six states filed a lawsuit arguing that the HEROES Act, which the loan cancellation plan relied on, does not authorize such a program. The court agreed with this argument.
President Biden expressed strong disagreement with the court’s decision and plans to announce new actions later on Friday to safeguard student loan borrowers. According to a source from the White House, Biden will attribute the denial of relief to student borrowers to Republicans, blaming them for obstructing his promised assistance.
Biden’s student loan initiative, which had been temporarily suspended due to ongoing litigation, involved the federal government providing up to $10,000 in debt relief (up to $20,000 for Pell Grant recipients) for individuals earning less than $125,000 per year. The program was estimated to cost the government over $400 billion.
In August 2022, Biden made an unprecedented effort to pursue debt cancellation, resulting in approximately 16 million applications being submitted before Republicans raised objections and halted the program.
Republicans argued that Biden lacked the authority to unilaterally forgive student loans, with estimates from the Congressional Budget Office indicating that his plan would cost taxpayers around $400 billion. Republicans voiced concerns about fairness towards those who paid for their education, repaid their loans, or did not attend college at all.
The Supreme Court considered two separate challenges to the law. In one case, Department of Education v. Brown, the court ruled that a pair of private borrowers lacked standing to sue and challenge the loan forgiveness plan.
The second case, Biden v. Nebraska, was more relevant as it involved six states suing against the loan forgiveness scheme. The court determined that at least Missouri had standing to sue because the program would impose significant financial burdens on a nonprofit government corporation established by the state called MOHELA.
Biden’s administration had based its enactment of the plan on the HEROES Act, claiming that the law granted the secretary of education the power to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs… as the secretary deems necessary in connection with a war or other military national emergency.”
However, the court majority rejected this argument, stating that the authority to “modify” statutes and regulations only allows for modest adjustments and additions, not a complete transformation. Chief Justice Roberts emphasized that the Department of Education’s modifications created a new and substantially different loan forgiveness program, which went beyond what Congress had intended in the HEROES Act.
The chief justice described the program as effectively granting loan forgiveness to nearly all borrowers nationwide. He stated that the comprehensive debt cancellation plan implemented by the secretary cannot be considered a mere waiver, as it nullifies existing provisions and significantly expands them. The court concluded that the language in the law does not authorize such an exhaustive rewriting of the statute.
The court’s three liberal justices dissented, with Justice Elena Kagan expressing her disagreement with the majority decision. She argued that it disregarded the joint judgment of the Legislative and Executive Branches, resulting in the elimination of loan forgiveness for 43 million Americans.
In anticipation of an unfavorable ruling, the Biden administration’s Education Department had been exploring alternative approaches to provide assistance through other means.
In June, Republicans presented their own plan to address student loans and high college costs, introducing a series of five bills. The plan supports programs aimed
at ensuring students have a clear understanding of the actual cost of college and discontinues loans for programs that do not lead to salaries sufficient to justify the loans. Senator Tommy Tuberville, a Republican from Alabama, praised the bill, highlighting that it would prevent students from being exploited for profit and encourage schools to reduce costs and compete for students.