WASHINGTON, DC - MAY 12: Student loan borrowers gather near The White House to tell President Biden ... [+]
In a decision that bodes reverberating consequences for 26 million borrowers across the country, the Supreme Court has ruled against President Joe Biden’s student debt forgiveness plan.
The plan, announced in August 2022, promised up to $20,000 in debt forgiveness for individuals with annual incomes below $125,000 (and households under $250,000) who received Pell Grants and up to $10,000 for individuals in those income ranges who did not receive Pell Grants. Ultimately, the plan would have cost over $400 billion.
In its initial press release, the White House cited the soaring cost of higher education, the crushing effects of loans on the middle class, and the widening racial wealth gap as critical factors necessitating student debt relief. However, less than a month after its announcement, the plan faced a lawsuit from a group of GOP-run states—Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina—arguing that the economically consequential move required authorization from Congress. A second lawsuit, brought by Myra Brown and Alexander Taylor, alleged that the plaintiffs were denied student loan forgiveness because Congress was not given the opportunity prior to the President’s formal announcement of the plan to advocate for constituents who may be impacted.
During oral arguments in February, Secretary General Elizabeth Prolegar pointed to the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) as the legal precedent for the President’s sweeping measure. The HEROES Act “authorizes the Secretary of Education to waive or modify any requirement or regulation applicable to the student financial assistance programs under title IV of the Higher Education Act of 1965,” particularly for veterans and those affected by a national emergency. The Biden administration has argued that Covid-19 is a national emergency that would fall under the parameters outlined in the HEROES Act and would therefore authorize Education Secretary Miguel Cardona to cancel student debt.
However, the Court’s conservative bloc appeared unlikely to vote in Biden’s favor, expressing concern that the President’s plan had not been cleared by Congress. Chief Justice Roberts noted, “if you're going to affect the obligations of that many Americans on a subject that's of great controversy, they would think that's something for Congress to act on,” while Justice Thomas stated more bluntly: “as a cancellation of $400 billion in debt, in effect, this is a grant of $400 billion, and it runs headlong into Congress's appropriations authority.”
While the move will have a tangible impact on households across America, public opinion on the bill has been divided. A recent survey in The New York Times found that 50% of Americans felt that Biden had overstepped his authority with the debt forgiveness plan, while the other 50% believed he had acted within his authority. Of note, only 27% of Democrats held the view that the President had overstepped, compared to 72% of Republicans and 53% of independent voters.
Though progressives have called for the President to assemble a contingency plan even prior to the Supreme Court’s decision, Biden’s next move on student debt relief remains to be seen.
