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Supreme Court strikes down Biden student loan forgiveness program

The program would have benefited 43 million Americans at a cost of $400 billion.

June 30, 2023, 11:28 AM

The Supreme Court on Friday struck down the Biden administration's program to forgive student loan debt for more than 43 million American borrowers.

In a 6-3 decision, written by Chief Justice John Roberts and read from the bench, the court ruled the Department of Education exceeded its authority when it moved to wipe out more than $400 billion in federal student loan debt.

The program, which invoked emergency powers because of the economic hardship brought by the pandemic, would have canceled $10,000 in student debt for all borrowers who made less than $125,000 and up to $20,000 for borrowers who also received Pell grants.

Six Republican-led states -- Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina -- argued the program was executive overreach. The administration, citing COVID's impact, pushed back the plan was lawful under the 2003 law HEROES Act, which states the government can provide relief to recipients of student loans when there is a "national emergency."

Roberts rejected the administration's argument, writing precedent "requires that Congress speak clearly before a Department Secretary can unilaterally alter large sections of the American economy."

"The Secretary asserts that the HEROES Act grants him the authority to cancel $430 billion of student loan principal. It does not," Roberts wrote. "We hold today that the Act allows the Secretary to 'waive or modify' existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up."

PHOTO: The US Supreme Court building is shown at night.
STOCK IMAGE/Getty Images

Justice Elena Kagan, in her dissent joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, said the court is overstepping its authority.

"From the first page to the last, today's opinion departs from the demands of judicial restraint," Kagan said in her dissent, which she read from the bench. "At the behest of a party that has suffered no injury, the majority decides a contested public policy issue properly belonging to the politically accountable branches and the people they represent."

The court's decision is a blow for President Joe Biden, who made tackling student loan debt a key campaign pledge. The loan forgiveness program was rolled out just ahead of the 2022 midterm elections, with Biden highlighting how the relief would have a life-changing impact on middle-class Americans.

The White House earlier this week continued to decline to say what a "Plan B" would look like should the court reject the plan.

Biden, in his first reaction to the ruling, said "the fight is not over."

"I believe that the Court’s decision to strike down our student debt relief plan is wrong," he said in a statement. "But I will stop at nothing to find other ways to deliver relief to hard-working middle-class families. My Administration will continue to work to bring the promise of higher education to every American."

Student loan payments are due to restart in October after a three-year pause put in place during the pandemic. Interest on federal student loans will start accruing in September.

Top Democrats criticized the court's decision and quickly called on Biden to explore more options to provide relief to borrowers, while Republicans lauded the ruling.

"This disappointing and cruel ruling shows the callousness of the MAGA Republican-controlled Supreme Court," Senate Majority Leader Chuck Schumer, D-N.Y., said in a statement.

"The fight will not end here," Schumer continued. "The Biden administration has remaining legal routes to provide broad-based student debt cancellation. With the pause on student loan payments set to expire in weeks, I call upon the administration to do everything in its power to deliver for millions of working- and middle-class Americans struggling with student loan debt."

House Speaker Kevin McCarthy said the the decision “builds on" Republican-led legislation to end the student loan payment pause.

"The President must follow the law," McCarthy tweeted.

In a separate opinion, the Supreme Court on Friday unanimously said two individual borrowers who also challenged the program lacked standing and dismissed the case.

This is a developing story. Please check back for updates.