Supreme Court strikes down Biden’s student debt relief plan

The Supreme Court on Friday struck down President Joe Biden’s plan to cancel up to $20,000 of student debt for tens of millions of Americans, thwarting a major domestic priority of the president as he seeks reelection.

In a 6-3 decision, the conservative majority on the court ruled that Biden’s effort to erase roughly $400 billion of student debt was an illegal use of executive power.

The decision immediately upends debt relief that the Education Department approved last fall for 16 million borrowers and the pending applications of millions of additional borrowers.

It also creates fresh political challenges for the White House, which will face pressure from progressives to make good on Biden’s promised loan forgiveness despite the legal setback.

Chief Justice John Roberts, writing for all his Republican-appointed colleagues, rejected the Biden administration’s argument that it could enact mass debt forgiveness by using emergency “waiver” powers tied to the Covid-19 pandemic.

Roberts wrote that the HEROES Act “allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions” but not to “rewrite” the federal law on student loans “from the ground up.”

Roberts wrote that Biden’s plan amounts to “the Executive seizing the power of the Legislature” and that it stretches the pandemic-related emergency measure far beyond its logical bounds.

The Biden administration’s “comprehensive debt cancellation plan cannot fairly be called a waiver — it not only nullifies existing provisions, but augments and expands them dramatically,” Roberts wrote, calling the “economic and political significance” of the move “staggering by any measure.”

Justice Elena Kagan’s dissent painted the court’s move as a troubling act of judicial overreach and said it fit a pattern of the court’s conservative majority intruding into actions that should be left to the political branches.

“The Court refuses to acknowledge the plain words of the HEROES Act. It declines to respect Congress’s decision to give broad emergency powers to the” secretary of education, Kagan wrote. “It does not let the political system, with its mechanisms of accountability, operate as normal. It makes itself the decisionmaker on, of all things, federal student-loan policy. And then, perchance, it wonders why it has only compounded the ‘sharp debates” in the country?”

The court’s decision renders the education secretary “powerless,” Kagan said as she read aloud portions of her dissent from the bench Friday. It was the third time in two days that a member of the court’s liberal bloc chose to dissent orally — a rare move that signals special vehemence. Earlier Friday, Justice Sonia Sotomayor read portions of her dissent in a case weakening protections for LGBTQ people, and on Thursday, Sotomayor read portions of her dissent in a case striking down affirmative action in higher education.

The HEROES Act, passed in 2003 in the wake of the terrorist attacks of Sept. 11, 2001, gave the Education Department special powers to change the typical rules of federal student loans to respond to a national emergency.

The law says that the secretary of Education may “waive or modify any statutory or regulatory provision” related to federal student loans “as may be necessary to ensure that” borrowers “are not placed in a worse position financially” because of a national emergency.

The Biden administration argued it needed to cancel student debt for most borrowers to avoid a surge of defaults when it resumes collecting payments for the first time after they’ve been paused during the pandemic for more than three years.

The justices delivered rulings on Thursday in a pair of cases challenging the debt relief plan.

The first was filed by a group of Republican state attorneys general, led by Nebraska and Missouri. A second case was brought by the Job Creators Network Foundation, a conservative group, on behalf of two federal loan borrowers from Texas who were partially or fully excluded from the debt relief program.

A central issue in the cases was whether the Republican-led states and those two borrowers had demonstrated the type of concrete injury that was required to have their complaints heard in federal court. The states argued that they had standing based on potential harm to the Missouri Higher Education Loan Authority, known as MOHELA, a contracted Education Department loan servicer that would face a reduction in borrower accounts to service under debt relief.

The conservative majority found that the states had standing to bring the case based on Missouri’s claims. The student debt relief program’s “harm to MOHELA is also a harm to Missouri” because the loan servicer is a “public instrumentality” of the state, Roberts wrote.

By contrast, the court ruled unanimously Friday, in an opinion written by Justice Samuel Alito, that the individual borrowers lacked legal standing to challenge the program. The two Texas borrowers had argued that they were injured because they were deprived of the opportunity to submit public comments on Biden’s student debt relief plan and advocate for their view that the relief should apply to them.

Conservatives celebrated the court’s decision as a victory for reining in a student loan forgiveness plan they’ve decried as an illegal scheme that’s too costly for taxpayers and unfair to Americans who don’t have student debt.

“This is an obvious but welcomed ruling,” said Sen. Bill Cassidy of Louisiana, the top Republican on the Senate education committee, who has led opposition to the plan in the Senate. “President Biden’s student loan scheme does not ‘forgive’ debt, but unfairly transfers the burden from those who willingly took out loans onto those who chose not to attend college or already fulfilled their commitment to pay off their loans.”

Progressives now want the administration to shift its focus to developing another way to cancel student debt that relies on a different law, such as the secretary of Education’s powers to compromise and settle debts under the Higher Education Act.

“This fight is not over,” Sen. Elizabeth Warren (D-Mass.) said in a statement after the ruling. “The President has more tools to cancel student debt — and he must use them.”

Senate Majority Leader Chuck Schumer criticized the ruling on Twitter as “disappointing and cruel” but added that the administration “has remaining legal routes to provide broad-based student debt cancellation.”

Biden administration officials had repeatedly said for months that they were confident in the legality of their initial debt relief program and weren’t working on a backup plan for canceling debt. But the White House will now have to decide how aggressively to pursue alternatives in the face of the rebuke by the Supreme Court.

They are now up against a looming deadline this fall when student loan payments, which have been suspended since the beginning of the pandemic in March 2020, are set to resume. Progressives have demanded that the Education Department refrain from collecting payments until they’ve delivered on student loan forgiveness.

The now-defeated plan Biden first unveiled last August called for forgiving up to $10,000 of debt per borrower or up to $20,000 of debt for borrowers who received Pell Grants.

Borrowers had to earn less than $125,000 individually or $250,000 as a couple in either 2020 or 2021 to qualify for the program. It applied only to federally held student loans taken out before July 1, 2022.

During the roughly four weeks that the Education Department accepted applications last fall, nearly 25 million Americans signed up for the program.

Legal challenges swiftly brought the program to a sudden halt as lower court judges struck down the plan and issued orders blocking it last year.

The cases raced up to the Supreme Court, even before federal appeals courts had ruled on the merits of either case. The court held oral arguments in February in which a majority of justices expressed their skepticism about the program.