Supreme Court rejects Biden's plan to partially cancel student debt

AP Photo/Jacquelyn Martin

In a major blow to President Biden's plans, the conservative supermajority of the Supreme Court has invalidated his proposal to partially cancel student debt for millions of borrowers. The court ruled that the plan exceeded the authority of the Education Department.

The 6-to-3 decision, led by Chief Justice John G. Roberts Jr., emphasized that a comprehensive program of debt cancellation on this scale must receive explicit approval from Congress.

Chief Justice Roberts strongly criticized the administration's argument, stating that the interpretation of the secretary of education's power to "waive or modify" loan terms went well beyond its intended scope. He likened the logic to the drastic impact of the French Revolution on the French nobility, quoting a previous court ruling, the New York Times reports.

Using the same legal basis employed by the Trump administration to initiate the temporary suspension of student loan payments amidst the pandemic, President Biden pledged in August to provide debt forgiveness. Under his proposal, individuals earning less than $125,000 per year, or households earning less than $250,000 annually, would be eligible for $10,000 in debt relief. Additionally, those who received Pell grants designed to assist low-income families would qualify for up to $20,000 in forgiveness.

Amidst ongoing legal challenges, approximately 26 million borrowers have submitted applications seeking partial cancellation of their student loan debt. Of these applications, around 16 million have been granted approval. However, no debts have been forgiven thus far, and further applications are not being accepted while the legal disputes persist.

Coming just a day after the Supreme Court dealt a blow to affirmative action policies in college admissions, the recent decision effectively halted what could have been one of the costliest executive actions ever implemented in the United States.

The New York Times reports:

• White House officials said Mr. Biden would denounce the court ruling in remarks scheduled for 3:30 p.m. and would “announce new actions to protect student loan borrowers.” The decision ratchets up the pressure to find a new way to make good on a promise to a key constituency as the 2024 presidential campaign gets underway.
• Borrowers and advocates assailed the decision and quickly called for Mr. Biden to try again. “Bold decisions and transformative policies are often met with initial resistance,” said Cody Hounanian, the executive director of the Student Debt Crisis Center.
• Chief Justice Roberts wrote the 26-page majority opinion, with Justice Amy Coney Barrett adding a concurrence. Justice Elena Kagan wrote the dissent, saying the court was exceeding “its proper, limited role in our nation’s jurisprudence.” Read the full opinions here, or highlights here.
• Although the administration’s plan was rejected by the court, there are still ways for borrowers to have student debt forgiven. Here are six ways to do it. Congress also has the power to forgive such debt, but it is exceedingly unlikely to do so.
• The amount of student debt held in America has skyrocketed over the last half-century as the cost of higher education has continued to rise, growing substantially faster than the increase in most other household expenses. More than 45 million people collectively owe $1.6 trillion — a sum roughly equal to the size of the economy of Brazil or Australia