The U.S. Supreme Court on Friday struck down President Biden’s sweeping plan to cancel some debt for millions of people who took out loans for a college education. Hours later, Biden said he would try again — with a new approach.
Writing for the court’s six-member majority, Chief Justice John G. Roberts Jr. said that the cancellation plan effectively amounted to an “exhaustive rewriting” of a law designed to give the U.S. secretary of education certain powers during a national emergency. The Biden administration had argued that the law, the 2003 Heroes Act, gives the secretary the ability to alleviate borrowers’ debt burdens during an emergency like the pandemic.
The Heroes Act, Roberts wrote, “does not allow the secretary to rewrite that statute to the extent of canceling $430 billion of student-loan principal.”
The justices’ ruling came in Biden v. Nebraska, No. 22–506, one of two cases that challenged Biden’s loan-forgiveness plan, in which his administration set out to wipe away up to $20,000 in student debt for many borrowers. The lawsuit was brought by a group of state attorneys general who argued that student-debt cancellation would harm their tax revenues.
In a dissent, Justice Elena Kagan, joined by the two other liberal justices, wrote that, “in every respect,” the majority had exceeded the court’s “proper, limited role in our nation’s governance.” The issues presented by the case, she wrote, were properly the concern of the government’s other branches. And so, she concluded, “in a case not a case, the majority overrides the combined judgment of the legislative and executive branches.”
In the other case, Department of Education v. Brown, No. 22–535, the justices ruled unanimously that the plaintiffs lacked standing to sue. The lawsuit was brought by two borrowers. One argued that the plan was unfair; she didn’t qualify for forgiveness because she had taken out private loans. The other borrower said he unfairly would not qualify for the maximum amount of forgiveness.
We shouldn’t be punishing people for decisions they make as teenagers.
The cancellation plan would have forgiven up to $10,000 in student debt for individual borrowers making up to $125,000 a year and households making up to $250,000 a year; Pell Grant recipients would have been eligible for up to $20,000 in forgiveness.
Many observers had anticipated that the court would void the debt-forgiveness plan. Conservative justices expressed skepticism during oral arguments this year that the Education Department was allowed to cancel student debt without approval from Congress. Some justices also seemed to support the idea that the plan was unfair because it didn’t benefit all borrowers.
A federal appeals court paused the debt-cancellation plan with an injunction last year. Before the injunction was issued, some 26 million people had applied for debt relief, and 16 million of them had been approved by the Education Department.
Later on Friday, Biden announced another attempt at student-loan cancellation. The Education Department will begin trying to enact debt relief under the Higher Education Act, using a process known as negotiated rulemaking. The department will also offer borrowers a 12-month “‘on ramp’ to repayment,” which officials said would ease the transition to restarting student-loan payments after a long pandemic-era pause. Until the fall of 2024, missed payments won’t cause borrowers to default or hurt their credit, according to the department.
The Reaction
One borrower who would have benefited from the original cancellation plan was Gabby F., a recent law-school graduate who rallied outside the court on Friday. Gabby, who asked to be identified only by her first name to keep details of her finances private, said she had taken out roughly $200,000 in student loans.
Beyond the court’s decision, she’s disappointed generally in how the student-debt system works. She feels as if she’s being penalized for going into public-interest law instead of making a bigger salary at a law firm.
“We shouldn’t be punishing people for decisions they make as teenagers,” she said. “Teenagers aren’t even allowed to vote or drink or buy a lottery ticket, but they’re expected to pay back loans for a contract they made when they were 17.”
Activists who pushed for debt forgiveness also expressed disappointment outside the court but said they’d keep the pressure on Biden to cancel student loans. “Justice is cancellation,” said Melissa Byrne, an organizer with We, The 45 Million. “Justice is free college because education is a right.”
What we had was an abrogation of power away from legislative power.
Some advocacy groups were pleased with the court’s decision to strike down the plan, including the New Civil Liberties Alliance. Student-debt relief might be a good policy or it might not, said Clegg Ivey, the group’s director of engagement. But that determination should be left to Congress.
“In this case, what we had was an abrogation of power away from legislative power to the executive branch,” Ivey said. “And this is a larger trend that we’re seeing.”
The ruling wasn’t a total black eye for advocates of loan reform. After Biden announced his forgiveness plan last August, the appetite in Washington shrank for conversations about more-measured changes to deal with America’s student-debt problem, said Justin Draeger, president and chief executive of the National Association of Student Financial Aid Administrators.
“Student-loan forgiveness has taken up all the oxygen in Washington, D.C.,” he told The Chronicle. “All of this has just underscored the need for student-loan reform, and we’re anxious to have that conversation.”
In addition to its new actions on debt relief, the White House is preparing to roll out a new income-driven repayment plan for borrowers, called “Saving on a Valuable Education,” or “SAVE.” Jon Fansmith, senior vice president for government relations at the American Council on Education, called it “the kind of step that’s needed.” And though it’s a generous policy, he said it’s more of a Band-Aid than a structural fix.
“The problem is that it’s one of several repayment plans,” he said. “We’re trying to solve the problem by making more and more generous plans rather than getting to the root of the problem.”
As they rejoiced on Friday, opponents of debt forgiveness vowed to keep fighting any such efforts. “This is just the beginning of the fight, not the end,” said E.J. Antoni, an economist at the Heritage Foundation, a conservative think tank, on a call with reporters. “The Biden administration has additional cards up their sleeves.”
