Supreme Court halts Biden student debt forgiveness plan

The US Supreme Court has invalidated Joe Biden’s $400 billion (£320 billion) student debt forgiveness plan, finding that the president lacked the authority to write off the loans.

The nation’s top court – with a supermajority of conservative jurists installed during the Trump administration – voted 6-3 to reject the plan, which was announced last August by Mr Biden as part of a 2020 campaign promise.

The loan forgiveness effort was challenged in court by two separate groups – a pair of Republican-backed student borrowers who argue they were excluded from some of the plan’s benefits, and an alliance of attorneys general from six Republican-led US states.

In a blow to Mr Biden, the court agreed with the six states that the Higher Education Relief Opportunities for Students Act of 2003 (Heroes Act) does not authorise the loan cancellation plan.

It also ruled that “modifications” allowed before the pandemic under the act were minor and had limited effect, but those being challenged here had created a novel and “fundamentally different” loan forgiveness programme.

Mr Biden promised during the 2020 campaign to cut student debt by at least $10,000 per borrower, and then took the action later in the Covid pandemic by citing the authority that Congress has given presidents to offer citizens relief during moments of national emergency.

Republicans contended that the size and extent of the forgiveness violated the spirit of the emergency authorisation. The party’s leading voice in Congress on educational matters, Virginia Foxx, called it a “ludicrous” attempt by President Biden to “simply bypass the will of the American people”.

Even some of Mr Biden’s political allies questioned the move – which he announced shortly before last year’s congressional elections in which Democrats fared surprisingly well – saying that the one-time gift to former students does little to help with the nation’s longer-term crisis in college affordability.

But Mr Biden shaped the plan to disproportionately assist those most in need. It would have cut per-person debt by $10,000 to $20,000, with the forgiven amounts tied to a borrower’s wealth and limited to those earning less than $125,000 a year.

The White House promoted the plan as a matter of fairness to borrowers whose educational experience did not deliver them workplace value, and as a way of stimulating economic activity among people so burdened by debt they can’t afford homes or families. More than 40 million US borrowers are estimated to have a combined $1.8 trillion in federal student loan debt.

But the Supreme Court’s conservative majority made clear, during oral arguments in the case in March, that they were sympathetic to Republican suggestions of political overreach.

The case “presents extraordinarily serious, important issues” concerning the nation’s constitutionally mandated separation of powers between the executive and legislative branches, one of the conservatives, Chief Justice John Roberts, said during the debate.

Amid the controversy, the Biden administration has persisted with taking a series of other steps to help student borrowers, including changing regulations to lower costs, improve repayment terms and expand existing federal programmes that forgive the loans over time and with regard to specific types of employment. The administration has also announced several instances of across-the-board loan forgiveness where students attended for-profit institutions that misled them about their job prospects.

In dissenting the ruling on the case, Elena Kagan – an associate justice appointed by Barack Obama in 2010 – says the court had “exceeded its proper, limited role” in the nation’s governance.

Jusice Kagan argues that the Heroes Act permitted the education secretary to give the relief that was needed, in the form deemed most appropriate, to counteract the effects of a national emergency on borrowers’ capacity to repay.

“That may have been a good idea, or it may have been a bad idea. Either way, it was what Congress said,” Justice Kagan writes.

Democratic senator Elizabeth Warren said the Supreme Court had refused to follow the “plain language” of the law on student loan cancellation.

“This fight is not over,” she tweeted. “The president has more tools to cancel student debt – and he must use them.”

However, Preston Cooper, senior fellow at the Foundation for Research on Equal Opportunity, said it would be “irresponsible” for the Biden administration to pursue alternative remaining legal routes to cancel student debt.

Posting on Twitter, he instead said it was time for Democrats to “come to the table on actual student loan reform instead of stringing borrowers along”.

paul.basken@timeshighereducation.com