The Supreme Court of the United States decided on Friday (30) that the Biden administration exceeded its authority with its plan to eliminate over $400 billion in student debt, frustrating the hopes of tens of millions of borrowers and imposing new restrictions on presidential power.
It was a setback for President Biden, who had promised to help borrowers “crawl out from under that mountain of debt.” More than 45 million people across the country owe $1.6 trillion in federal college loans, according to government data, and the debt cancellation proposal, announced by Biden last summer, would have been one of the most expensive executive actions in U.S. history.
The vote was 6 to 3, with the court’s liberal members dissenting from the majority decision.
The administration argued that its plan aimed to address the coronavirus pandemic and its prolonged effects and that it was authorized by the Higher Education Relief Opportunities for Students Act of 2003, known as the HEROES Act. This law, enacted after the September 11, 2001 terrorist attacks, gives the Secretary of Education the power to “waive or modify any statutory or regulatory provision” to protect borrowers affected by “a war or other military operation or national emergency.”
In March 2020, President Donald J. Trump declared the coronavirus pandemic a national emergency, and his administration invoked the HEROES Act to pause student loan payments and suspend interest accrual.
The Biden administration maintained the measure. The payment pause has already cost the government over $100 billion, according to the Government Accountability Office.
Last August, the administration said it planned to end the payment pause but would forgive $10,000 in debt for individuals earning less than $125,000 per year, or $250,000 per family, and $20,000 for those who received Pell Grants, aimed at low-income families.
Nearly 26 million borrowers applied for partial debt cancellation. Although the government approved 16 million applications, no debt has been canceled yet. The Department of Education, which owns and manages the government’s $1.5 trillion student debt portfolio, stopped accepting applications due to legal challenges.
In separate cases, six Republican-led states – Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina – and two individuals filed a lawsuit to halt Biden’s new plan. They relied on recent decisions employing the so-called “major questions doctrine,” which states that Congress must speak particularly clearly when authorizing the Executive Branch to act on significant political and economic issues.
The Supreme Court used the doctrine to justify its decision.
The justices assessed whether the Higher Education Relief Opportunities for Students Act of 2003 – or the HEROES Act – allowed the Secretary of Education to establish a student loan forgiveness program. Chief Justice John Roberts, writing for the conservative majority, criticized the Biden administration for “rewriting” the law “from scratch” when it created the program and agreed with the states that initiated the case that the plan exceeds the authority granted to the secretary by the statute.
He emphasized that the program amounted to the executive branch “taking power from the Legislative.”
Writing the dissenting opinion, Justice Elena Kagan, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, expressed outrage at the court’s decision blocking President Joe Biden’s student loan forgiveness program.
Kagan condemned what she characterized as a broader trend of the conservative majority, in which they limit the discretion of the executive branch under the “major questions doctrine.”
She even raised the possibility that, following this path, the doctrine could be used against historic government programs like Medicare.
Borrowers will need to resume repaying their debts starting in October
In October, tens of millions of borrowers will be required to start repaying their monthly federal student loan bills for the first time since March 2020, the Department of Education reported earlier this month.
The Biden administration said it will announce new actions to protect student loan borrowers.
Source: The New York Times and CNN