The United States Supreme Court invalidated President Joe Biden’s initiative to cancel large amounts of federal student loan debt on Friday, June 30th, asserting that the President exceeded his executive power. On its final day before the summer break, the Court rejected the $400 billion plan’s reliance on a 2003 law initially designed to assist Iraq and Afghanistan war veterans.
The ruling, penned by Chief Justice John Roberts, asserted that the law only permits the Education Department to alter or waive existing schemes under the Federal Education Act of 1965, not overhaul it entirely. Roberts emphasized that the issue wasn’t the plan’s merits but who held the power to enact it.
Justice Roberts, in its decision, also cited a statement by former House Speaker Nancy Pelosi, who acknowledged Biden could modify the amount or timing of payments but not entirely forgive the debt.
Pelosi stated in July 2021, “People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”
Roberts argued that the administration failed to demonstrate “clear congressional authorization to justify the challenged program.”
The ambitious loan forgiveness initiative, revealed in August 2022, aimed to cancel up to $10,000 in federal student loans for Americans earning under $125,000 and families with incomes under $250,000. Furthermore, Pell Grant recipients could have up to $20,000 waived. As of late February, 26 million people had applied for debt forgiveness, with 16 million gaining approval.
Reacting to the Court’s decision, President Biden expressed his intention to employ a new strategy for student loan forgiveness.
He said, “Today’s decision has closed one path. Now we’re going to start another.”
The Biden administration’s new strategy will excuse missed payments for financially vulnerable borrowers for the initial 12 months after loan collection restarts on October 1st. There were also plans to decrease the required monthly payment from borrowers’ discretionary income from 10% to 5% and forgive outstanding debts of $12,000 or less after a decade of repayments.
The lawsuit against the forgiveness program was filed by six Republican states: Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina. The Supreme Court also dismissed a case brought by two borrowers who did not fully qualify for the program, ruling they lacked standing.
The court ruling found Biden’s loan forgiveness plan, which the White House believed could be enacted under the 2003 HEROES Act, to be more than a mere modification of an existing benefit. Initially intended to assist U.S. service members in Afghanistan and Iraq financially, the act was broadened to allow the Education Department to change other federal student loan terms during national emergencies.
The ruling is another setback for Biden’s administration, following the Supreme Court’s earlier invalidation of an eviction moratorium and a plan for mandatory vaccination or testing at large companies. The ruling comes just a day after a 6-3 ruling preventing colleges and universities from considering race in admissions decisions.
