US Supreme Court rules against Biden’s plan to forgive millions of student loans

The United States Supreme Court on Friday rejected President Joe Biden’s plan to forgive millions of student loans, as it ruled that the president did not have the legal authority to waive more than $400 billion owed to the government.

Voting a 6-to-3 vote in Biden vs. Nebraska, the court ruled that only Congress could authorize such a large-scale cancellation of government-provided loans, and it had not done so.

Chief Justice John G. Roberts Jr. in a major ruling said, “The HEROES Act allows the secretary to ‘waive or modify'” provisions of the student aid laws, “but does not allow the secretary to rewrite that statute to the extent of cancelling $430 billion of student loan principal.”

Roberts called the cost and scope of Biden’s plan “staggering by any measure.” He cited a University of Pennsylvania study that estimated the “program will cost taxpayers between $469 billion and $519 billion depending on the total number of borrowers” who were covered.

In dissent, Justice Elena Kagan wrote: “In every respect, the court today exceeds its proper, limited role in our nation’s governance….. The result here is that the court substitutes itself for Congress and the executive branch in making national policy about student-loan forgiveness.”

She argued that Congress had indeed authorized “waiving” student loans in the face of a national emergency, and it was the conservative court that was rewriting the law.

In response, Roberts fired back: “The dissent is correct that this is a case about one branch of government arrogating to itself power belonging to another. But it is the Executive seizing the power of the Legislature.”

The Biden administration had asserted its right to cancel the loans as part of its emergency response to the COVID-19 pandemic and under a 2003 law called the HEROES Act, passed at the time of the Iraq War.

A White House official said Friday that Biden disagreed with the court’s decision and would have would be speaking later in the day on the ruling.

As a candidate in 2020, Biden promised to forgive up to $10,000 in student loans for many young borrowers, but he did not seek legislation from Congress when it was under Democratic control.

Last year, with the end of the pandemic in sight, he joined Education Secretary Miguel Cardona to announce the government — as part of its COVID-19 response — would forgive $10,000 of most outstanding student loans and up to $20,000 for those who came from low-income families

But the policy’s legal status remained in doubt. The 2003 HEROES Act said the Education Department could “waive or modify” any provision of the government-funded student loans for any borrower affected by “a war or other military operation or national emergency.”

Lawmakers said they aimed to extend temporary relief to those who were called up to serve in Iraq and to make sure they were not “in a worse position financially” because of their service.

In March 2020, President Trump declared a national emergency in response to COVID-19, and his administration suspended the required repayments and the accrued interest on outstanding students loans. These suspensions have remained in effect and have cost the government more than $100 billion.

The White House said his plan to forgive some or all of millions of loans would “provide more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic.”

But attorneys for Nebraska and five other Republican-led states sued and argued the president was “unlawfully invoking the COVID-19 pandemic to assert power beyond anything Congress could have conceived.”

In defence of the plan, the administration’s lawyers said Congress had indeed authorized the Education Department to “waive or modify” any provision of the student aid programs. They also argued the states had no standing to sue because they were not harmed by the president’s decision to forgive loans.

But a federal appeals court in St. Louis sided with the Republican-led states and blocked the loan cancellation program from taking effect. In December, the Supreme Court refused to lift that order and agreed to hear the administration’s appeal in late February.