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A sharply divided Supreme Court ruled Friday that the Biden administration overstepped its authority in trying to cancel or reduce student loans for millions of Americans.
The 6-3 decision, with conservative justices in the majority, effectively killed the $400 billion plan, announced by President Joe Biden last year, and left borrowers on the hook for repayments that are expected to resume by late summer.
Biden was to announce a new set of actions to protect student loan borrowers later Friday, said a White House official. The official was not authorized to speak publicly ahead of Biden’s expected statement on the case and spoke on condition of anonymity.
The court held that the administration needed Congress’ endorsement before undertaking so costly a program. The majority rejected arguments that a bipartisan 2003 law dealing with national emergencies, known as the HEROES Act, gave Biden the power he claimed.
“Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree,” Chief Justice John Roberts wrote for the court.
Justice Elena Kagan, wrote in a dissent, joined by the court’s two other liberals, that the majority of the court “overrides the combined judgment of the Legislative and Executive Branches, with the consequence of eliminating loan forgiveness for 43 million Americans.” Kagan read a summary of her dissent in court to emphasize her disagreement.
Roberts, perhaps anticipating negative public reaction and aware of declining approval of the court, added an unusual coda to his opinion, cautioning that the liberals’ dissent should not be mistaken for disparagement of the court itself. ”It is important that the public not be misled either. Any such misperception would be harmful to this institution and our country,” the chief justice wrote.
Loan repayments will resume in October, although interest will begin accruing in September, the Education Department has announced. Payments have been on hold since the start of the coronavirus pandemic more than three years ago.
The forgiveness program would have canceled $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would have had an additional $10,000 in debt forgiven.
Twenty-six million people had applied for relief and 43 million would have been eligible, the administration said. The cost was estimated at $400 billion over 30 years.
Advocacy groups supporting debt cancellation condemned the decision while demanding that Biden find another avenue to fulfill his promise of debt relief.
Natalia Abrams, president and founder of the Student Debt Crisis Center, said the responsibility for new action falls “squarely” on Biden’s shoulders. “The president possesses the power, and must summon the will, to secure the essential relief that families across the nation desperately need,” Abrams said in a statement.
The loan plan joins other pandemic-related initiatives that faltered at the Supreme Court.
Conservative majorities ended an eviction moratorium that had been imposed by the Centers for Disease Control and Prevention and blocked a plan to require workers at big companies to be vaccinated or undergo regular testing and wear a mask on the job. The court upheld a plan to require vaccinations of health-care workers.
The earlier programs were billed largely as public health measures intended to slow the spread of COVID-19. The loan forgiveness plan, by contrast, was aimed at countering the economic effects of the pandemic.
In more than three hours of arguments last February, conservative justices voiced their skepticism that the administration had the authority to wipe away or reduce student loans held by millions.
Republican-led states arguing before the court said the plan would have amounted to a “windfall” for 20 million people who would have seen their entire student debt disappear and been better off than they were before the pandemic.
Roberts was among those on the court who questioned whether non-college workers would essentially be penalized for a break for the college educated.
In contrast, the administration grounded the need for the sweeping loan forgiveness in the COVID-19 emergency and the continuing negative impacts on people near the bottom of the economic ladder. The declared emergency ended on May 11.
Without the promised loan relief, the administration’s top Supreme Court lawyer told the justices, “delinquencies and defaults will surge.”
At those arguments, Justice Sonia Sotomayor said her fellow justices would be making a mistake if they took for themselves, instead of leaving it to education experts, “the right to decide how much aid to give” people who would struggle if the program were struck down.
The HEROES Act—the Health and Economic Recovery Omnibus Emergency Solutions Act—has allowed the secretary of education to waive or modify the terms of federal student loans in connection with a national emergency. The law was primarily intended to keep service members from being hurt financially while they fought in wars in Afghanistan and Iraq.
Biden had once doubted his own authority to broadly cancel student debt, but announced the program last August. Legal challenges quickly followed.
The court majority said the Republican-led states had cleared an early hurdle that required them to show they would be financially harmed if the program had been allowed to take effect.
The states did not even rely on any direct injury to themselves, but instead pointed to the Missouri Higher Education Loan Authority, a state-created company that services student loans.
Nebraska Solicitor General James Campbell, arguing before the court in February, said the Authority would lose about 40% of its revenues if the Biden plan went into effect. Independent research has cast doubt on the financial harm MOHELA would face, suggesting that the agency would still see an increase in revenue even if Biden’s cancellation went through. That information was not part of the court record.
A federal judge initially found that the states would not be harmed and dismissed their lawsuit before an appellate panel said the case could proceed.
In a second case, the justices ruled unanimously that two Texans who filed a separate challenge did not have legal standing to sue. But the outcome of that case has no bearing on the court’s decision to block the debt relief plan.
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Thomas, Roberts, and Alito need to keep those billions flowing to their buddies so they can keep flying in private jets and taking fancy vacations.
Media smear campaigns are not to be taken seriously. I’m sorry that you were fooled. Unless of course, you are part of the smear.
Is it a smear campaign if they..
1) Actually did it?
2) Were photographed doing it?
3) Broke Federal law by failing to report it?
Given that they did the above three, I’m gonna call it “reporting.” Sorry that you got hoodwinked by billionaires.
A.R. You are playing fast and loose with your statements, you sure you don’t write for the Associated Press!? The federal reporting law just changed this year, so it did not apply to past reports. And, before you cry loophole, I agree the benefits should have been reported before. But, your statement that it broke federal law is not true, if it had happened this year it would be true. Do you think that if the DOJ could arrest a conservative justice on something as cut and dried as you make it sound, they wouldn’t have already done it? Of course they would, they just can’t. And, are we certain the liberal justices aren’t partaking of similar benefits!? (asking for a friend)
A.R.
They broke no laws!
Second, the leftists need to stop trying to delegitimizating the courts.
It will undermine our democracy.
***. That said, I have one question for you. If Biden’s economy is so strong
and jobs so plentiful, then why can’t student borrowers repay their loans????
Is somebody borrows money and agrees to repay it they need to honor that commitment.
agree
Then bankruptcy shouldn’t be allowed.
Unless you’re a business owner who has the means to help themselves. Then you get P3 loan forgiveness, big tax breaks, etc.
Forgiveness and money for me, but not for thee!
A.R. You and the other leftwingers are forgetting one thing.
Government, primarily Democrats needlessly shut those businesses down.
So yes, they should have been reimbursed.
Keith – when did trump become a democrat?
But when you are in debt to your ears and a politician, especially the Big Guy, says vote for me and I will cancel your debt, you will vote to get out of debt. (And the newly minted IRS agents will check your tax return to see if you correctly reported cancellation of debt as income!)
$800 Billion in PPP loans to businesses forgiven, no questions asked. Student loans? Get out of here. This money is for the already-rich
The PPP was a part of the bipartisan CARES Act, which included several welfare programs, including federal unemployment compensation benefits for individuals. It was enacted by Congress and signed into law by the President. President Biden’s student loan forgiveness program was an executive action, not congressional action. They are entirely different programs and subject to different legal scrutiny.
M.H., That is a totally false statement. PPP loans WERE NOT forgiven no questions asked. In order to be forgiven, a PPP loan granted to a company had to be substantiated by payroll paid to employees (main purpose, and substantiated by 941 tax filings and the W-2’s of employees) or rent and utilities paid by the Company. (supported by invoices/cancelled checks) The payroll and rents had to be paid during a specified time period (when Covid had the country mostly shut down) and had to be 75% or 80% payroll.
Gregory G.
+ 1
These businesses were needlessly shut down by the government.
It wasn’t competition that shut them down or market conditions.
It was because of government.
Needlessly? Ever consider that one reason we had inflation is because so many workers died or became unavailable to work due to COVID?
Now, if you want to say that we had to close businesses needlessly because we dawdled through February 2020 when it came to reaction to COVID instead of snapping into action, maybe you’re on to something…
The politics of the Supreme Court are increasingly distressing, as these comments show. It is eagerly making national policy while pretending to be impartial lawyers applying the law, in between planning luxury vacations, that will soon start.
Thanks to McConnell and Trump, SCOTUS is now purely a political body, unelected and in office for life, there for the explicit purpose of enacting policy that cannot pass through majority rule but is favored by a conservative minority that has no qualms shoving their ideology down the throats of the majority. Wholly un-American and corrupt.
That’s exactly right. They aren’t impartial justices, they’re shills for their buddies and must be removed from the bench. They are no longer capable of serving the public or the Constitution.
Steve D. /. A.R.
Your accusations can absolutely be applied to your Justices also.
Interesting that you would state SCOTUS is engaging in politics when POTUS, well prior to making his vote getting promise to cancel student loan debt, stated that he didn’t believe he could legally cancel the debt. Looks like he was telling the truth then, not so much now.
Mitch packed the Court. It will go down as his legacy and greatest accomplishment.
Wow! PPP was not a loan to businesses, but was a 100% government pass-through to keep employees employed and avoid fiscal disaster. Without that influx of financial assistance to businesses, they would have closed due to Covid and laid off all of their employees and then what? Colleges and universities are not anything more than big businesses (and qualified for PPP) earning their income/profits tax free from the students they educate. Cars, healthcare, shoes and hamburgers are not free, neither is a college education. The customer has to pay for it. We have car loans and we have education loans. What’s the difference?
The difference is that PPP was sold as a pass-through but was used to enrich people. It’s estimated that there was $100 billion in fraud. Trump funneled more than $3 million to businesses on properties owned by him and Kushner. It’s corruption all the way down.
PPP benefited the general public. Student loan forgiveness benefitted the decision an individual made.
I think it is the liberal side of the country that is wanting to shove down their ideology down the throats of anyone that would not totally and wholly embrace their radical beliefs. Those preaching “tolerance” usually only want tolerance of their beliefs–not those of others. Anyone who dares to say anything contrary to the whatever the current politically correctness doctrine is this year is immediately silenced or cancelled. That’s what is un-American,
Yeah, your belief is that gay people shouldn’t have equal rights under law, poor people should suffer, and that brazen corruption is okay so long as it is a means to your preferred outcome.
These are not the same.
Terry B.
+ 1
THANKFULLY this was REJECTED. PAY your bills, earn a living, and stop asking us who made our way to pay for your absurd handouts.
+1 agreed
If any debt were to be forgiven (never an incentive for individuals) wouldn’t it be medical first? Medical debt is beyond one’s control, thrust upon them without regard to class, and often financially debilitating.
Some medkcal debt is from those that don’t want to pay for insurance and then want a handout.
I have one question for our friends on the Dem side that are complaining about
the U.S. Surpreme decision.
Biden touts this economy as his and the best ever. If this Biden economy is the best,
then why can’t students find jobs, start working, and repay their loans???
SCOTUS got two in a row right. Well done. Perhaps our nation is finally waking up
It’s always a chuckle when dims get their bloomers in a bind over their failures to manage SCOTUS appointments. Should have tried harder to convince Ginsburg to resign when she was still breathing.
Hey, full credit to Republicans. They made new rules from whole cloth that don’t apply to them – first, they refused to even vote on a replacement to Scalia … then they ignored that rule and created a new one to ram through Barrett.
Democrats need to realize the old rules don’t apply and they’re not dealing with people interested in American democracy any longer.
Joe B:
It is a Republic if you can keep it! Benjamin Franklin