The U.S Supreme Court has rejected President Joe Biden’s $400 billion plan to cancel or reduce federal student loan debts for millions of Americans.
The 6-3 decision ruling, passed on Friday, 30 June 2023, states that the Biden administration overstepped its authority with the loan forgiveness plan.
According to the court, the administration needed Congress’ approval before starting such an expensive program. The court rejected arguments that the HEROES Act, a national emergency measure passed by both parties in 2003, provided Biden the authority he claimed.
“Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree,” Chief Justice John Roberts wrote.
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.
Justice Elena Kagan, joined by the court’s two other liberals, wrote in a dissent 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.
However, Chief Justice John Roberts cautioned 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.
Democratic Senate Majority Leader, Chuck Schumer denounced what he labelled the “MAGA Republican-controlled Supreme Court”, while calling the ruling “callous.”
“The fight will not end here. The Biden administration has remaining legal routes to provide broad-based student debt cancellation,” Schumer averred.
Meanwhile, Republican House Speaker, Kevin McCarthy, hailed the court’s decision.
“The 87% of Americans without student loans are no longer forced to pay for the 13% who do,” he said.
Loan Repayments To Resume In October
The Education Department announced that loan repayments will resume in October, although interest will begin accruing in September. 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 which support debt cancellation condemned the decision while demanding that Biden finds another way to fulfill his promise of debt relief.
Natalia Abrams, President and founder of the Student Debt Crisis Center, opined that 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.
Deputy Executive Director of Student Borrower Protection Center, Persis Yu said, “Today, a majority of this corrupt court brushed aside the rule of law to advance its ideological crusade against working people.”
Melissa Byrne, a student loan activist, called on the Biden administration to “immediately implement a plan B” in the wake of the decision. “President Biden must cancel student debt before student loan repayment begins. Failure to deliver student loan relief is not an option,” she said.
The loan plan joins other pandemic-related initiatives that failed at the Supreme Court.
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