On June 30, the Supreme Court ruled against the Biden Administration’s $400 billion student loan forgiveness plan, which would have been the most expensive executive act in US history.
The plan would have reduced the educational debt of tens of millions of students and was prompted by the economic hardships the government caused during the unnecessarily prolonged Covid lockdowns. Following Trump’s student loan pause during the Covid years, the Biden Administration announced the loan forgiveness plan in August 2022.
Twenty-six million people applied for debt forgiveness after Biden announced the plan in 2022. The plan would have waived up to $10,000 for the majority of borrowers, while recipients of the Pell Grant, a grant for students with exceptional financial need, would have been eligible for up to $20,000 of debt cancellation. Anyone earning less than $125,000, and any households earning less than $250,000 could qualify for debt cancellation.
The Supreme Court ruled 6-3 that the secretary of the Department of Education, Miguel Cardona, did not have the authority to enact such a massive program. In an opinion delivered by Chief Justice Roberts, the Court ruled that the plan would need Congressional approval to be constitutional.
Cardona cited the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act), which allows the secretary to “waive or modify” federal student loans in response to national emergencies. The Act was implemented in the wake of the 9/11 terrorist attacks.
In Biden v. Nebraska, six states challenged Biden’s plan, accusing the secretary of overreach.
In a related case, Department of Education v. Brown, two applicants to the program sued the department for exceeding its bounds. The two, Myra Brown and Alexander Taylor, did not qualify for “maximum relief” under the plan. The Department of Education did not follow the “mandatory procedures” of “negotiated rulemaking” and “notice and comment,” they alleged.
In the decision, Chief Justice Roberts critiqued the secretary’s interpretation of “modify,” saying that the secretary used it “in the same sense that the French Revolution ‘modified’ the status of the French nobility.”
Three justices dissented against the Court’s ruling. Justice Elena Kagan argued that the Supreme Court overstepped its bounds in a dissent signed by Justices Ketanji Brown Jackson and Sonia Sotomayor.
“In every respect, the Court today exceeds its proper, limited role in our Nation’s governance,” Kagan wrote in the dissent.
Kagan argued that the Court was acting in place of Congress and the Executive Branch.
“Congress authorized the forgiveness plan (among many other actions); the Secretary put it in place; and the President would have been accountable for its success or failure,” said Kagan. “But this Court today decides that some 40 million Americans will not receive the benefits the plan provides, because (so says the Court) that assistance is too ‘significan[t].’”
Student loan repayments will resume in October after being paused several times as the case traveled through the courts and following the Covid lockdowns.
