by Bria Overs
After months of waiting, borrowers now have answers on the fate of their federal student loans. The Supreme Court struck down the Biden administration’s student debt relief plan. The plan would have canceled up to $20,000 in federal loans for eligible borrowers, totaling over $400 billion in relief.
Because of the decisions from the Court, borrowers can expect their student loans to start gaining interest again as early as September and payments to restart in October.
The Court decided on two cases today — Biden v. Nebraska and U.S. Department of Education v. Brown. Both sought to block student loan forgiveness and challenged the president’s authority to push a plan of such magnitude.
In Biden v. Nebraska, six Republican-led states argued that the student-debt plan would harm their states’ tax revenues, as well as harm Missouri-based student-loan servicer MOHELA.
The administration, on the other hand, argued they were well within their power, citing the HEROES (Higher Education Relief Opportunities for Students) Act of 2003. The act was originally passed in 2001 and expanded in 2003 to allow the Education Secretary to provide relief for borrowers affected by war, military operation, or national emergency.
The Court ruled 6-3 in the states’ favor, pointing out that the HEROES Act permits the Secretary to “modify” but does not permit “basic and fundamental changes in the scheme.”
Student debt cancellation is significant for marginalized people, especially Black borrowers who hold a majority of the overall debt.
“Student loan debt is an urgent crisis that disproportionately burdens Black and LGBTQ+ students, compounding barriers in accessing post-secondary opportunities and achieving equity and justice, more generally,” David J. Johns, executive director of the National Black Justice Coalition, said in a statement.
“Instead, ‘modify’ carries ‘a connotation of increment or limitation,’ and must be read to mean ‘to change moderately or in minor fashion,’” the decision reads.
In U.S. Department of Education v. Brown, two student-loan borrowers sued the department because they were not eligible for the full $20,000 of relief. In the forgiveness plan, those who did not receive Pell Grants while attending college but met the income threshold were eligible for half the relief at $10,000.
The judges unanimously, 9-0, decided to toss out the U.S. Department of Education v. Brown and stated the cases lack of standing as the cause.
In this case, the decision reads, “Because respondents fail to establish that any injury they suffer from not having their loans forgiven is fairly traceable to the Plan, they lack Article III standing, so the Court has no jurisdiction to address their procedural claim.”
The statement also pointed to “hypocrisy” from the Republican party for forgiveness of loans from the Paycheck Protection Program (PPP).
Outside of today’s rulings, the Biden administration previously announced in Nov. 2022 a plan to restart payments 60 days after implementation if the Supreme Court ruled in their favor. Or 60 days after June 30 if the Supreme Court struck it down.
However, Congress recently passed legislation to block Biden’s relief program and end the payment pause, guaranteeing the restart regardless of the Court’s decisions.
The Jobs Creator Network Foundation, part of the support for legal challenging, claims the Court’s ruling will help address rising tuition rates, a growing issue among colleges.
“With this ruling, the Supreme Court has protected hardworking Americans who have paid back their student loans or never went to college from having to unfairly cover the college debt of others,” the statement reads.
Other organizations, along with several prominent politicians, who are advocates for the plan, urge Biden to take a new route to fulfill his campaign promise of relief for borrowers.
“Student loan relief is a promise from President Biden to more than 40 million families,” Melissa Byrne, student loan activist and executive director of We The 45 Million, said in a statement. “It is our chance for dignity. He must immediately implement a plan B including finding a different path to ensure no repayment begins until cancellation is delivered. Failure to deliver student loan relief is not an option.”
