The Supreme Court overturns Biden’s student debt relief plan
The conservative supermajority said the power to cancel student loan lies within Congress, while the three liberal justices said the court should have never decided the case to begin with.
Editor’s note: Below is another special edition of Supercreator, featuring an in-depth analysis in plain English of the Supreme Court’s decision to strike down President Biden’s plan to cancel up to $20,000 of student loan debt for eligible borrowers. If you value Supercreator’s independent journalism and have the resources, please subscribe to support more of it. Thank you for being you.
The Supreme Court on Friday morning struck down Joe Biden’s student debt relief program in a 6-3 decision that will prevent millions of Americans from receiving what the president often describes as “a little more breathing room” after the economic disruptions that accompanied the pandemic.
In an opinion written by Chief Justice John Roberts, who authored the decision on Thursday to overturn affirmative action, held that the Missouri Higher Education Loan Authority, also known as MOHELA, would suffer financial harm from being unable to collect interest on student loan debt.
The court also ruled that while the HEROES Act — a 2003 law the White House said its power to cancel student loan debt derived from — permits a modification to the law, the administration’s plan dramatically expands the law’s existing provisions beyond the executive branch’s authority.
“‘Modify’ carries ‘a connotation of increment or limitation,’ and must be read to mean ‘to change moderately or in minor fashion,’” the opinion reads. “That is how the word is ordinarily used and defined, and the legal definition is no different.”
Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett joined Chief Justice Roberts’ opinion.
In her dissenting opinion, Justice Elana Kagan called the court’s decision to hear the case in the first place judicial overreach because the plaintiffs lacked standing to challenge the student debt relief program.
“And the court’s role confusion persists when it takes up the merits,” Kagan wrote, while arguing that Congress gave Secretary Cardona discretion to provide student-loan borrowers relief when a once-in-a-generation pandemic struck.
Similar to the other case the Supreme Court decided today, which ruled the First Amendment allows a Christian web designer in Colorado to refuse to make a site for a hypothetical same-sex couple that never sought her services in the first place, Kagan said the six states who sued the Biden administration object to the program with general grievances, not the particular injury required to bring suit.
Further, in her view, the states failed to demonstrate how they are harmed by a plan that reduces individual borrowers’ federal student-loan debt. And although the majority opinion says it’s up to Congress to cancel student debt, Kagan said that by overturning the program, the court “substitutes itself for Congress and the executive branch in making national policy about student-loan forgiveness.”
Justices Sonia Sotomayor and Ketanji Brown Jackson joined Justice Kagan in dissent.
President Biden last August announced his plan to cancel $10,000 of student loan debt for borrowers earning up to $125,000. For recipients of Pell Grants, which help undergraduate students from low-income households pay for college, the program canceled an additional $10,000 in federal loan debt. At the time, President Biden also extended the pause on student payments through the end of the year. (Student loan interest will resume starting Sept. 1 and payments will be due starting in October.)
The decision came after more than a year of internal deliberation between Biden and his advisors and represented the president’s attempt to fulfill a major campaign promise that energized the young and racially diverse coalition that powered his victory in 2020 while remaining within the limits of his executive authority and attempting to avoid making inflation worse.
The Supreme Court in February heard oral arguments on two cases, one of which was brought by top Republican officials in six states including Nebraska and Missouri.
The states claimed that the student debt relief plan violated the Constitution’s separation of powers and various provisions of the Administrative Procedure Act, the federal statute that governs how administrative agencies of the federal government may propose and establish regulations.
In the other case, two borrowers — one of whom was ineligible for any debt cancelation and the other one who qualified for $10,000 in cancelation — claimed the Education Department should have put the student debt relief plan out for notice and comment under the APA so that they could have advocated for a broader program that would have given them relief. (The Court unanimously ruled the plaintiffs didn’t have standing in this case.)
If President Biden’s plan would have gone into effect, the government would have paid the monthly payment instead of the borrower until the forgivable portion of the loan was paid off.
Those earning less than $125,000 per year wouldn’t have had to make monthly payments or accrue interest while those earning more than $125,000 would pay no more than five percent of discretionary income toward payments. After 20 years, the remainder of federal student loans would have been forgiven without any tax burden and those who participate in public service would have been eligible for additional federal loan relief.
One in three borrowers would have seen their student loans completely wiped out under Biden’s plan, according to the Office of Federal Student Aid at the Education Department. 20 percent would have seen at least half of their student loan debt canceled. And another 21 percent would have received relief for at least a quarter of their loans. Young borrowers would have been impacted the most: More than half of all Americans with student debt are between the ages of 18 and 34.
The Penn Wharton Budget Model estimated that the cancelation at this threshold will cost $300 to $330 billion over the next decade. (The price tag would have been $980 billion over the same period had Biden canceled $50,000 per borrower.)
Despite the impact the plan would have had on communities of color, the plan had its critics in Congress.
The chief objection: The program was unfair to taxpayers who never went to college and Americans suffering from prolonged inflation.
In May, the House passed a resolution to overturn it. A week later, the Senate did the same before President Biden vetoed the resolution. (Two Democrats joined all Republicans in the House; two Democrats and an Independent joined all Senate Republicans. A House vote to override Biden’s veto failed.)
As your Supercreator author wrote when the president announced his plan, it was an explicit effort to address existing debt.
But future debt is also a cause for concern when you consider the rising cost of college tuition. Universities increased their tuition by two to three percent this fall with the highest tuition hikes falling between four and five percent. Private four-year colleges increased tuition by an average of about $7,000 every decade over the past 30 years, according to College Board’s latest Trends in College Pricing report. During the same period, public universities saw a 158.2 percent increase in tuition. But senior administration officials say the reforms to existing loan repayment plans will address some of these concerns.
And although wages are up of late, a college education no longer guarantees a living wage: One in four Americans with a university or post-graduate degree, aged 25 and up, are making less than $30,000 per year while 14 percent earn below the poverty threshold, according to a recent survey of 1,000 respondents. Close to half regularly feel uncertain about their ability to pay rent and report living paycheck to paycheck; 40 percent are “highly concerned” about student loan payments restarting.
Now that the Supreme Court has had its say, your Supercreator author expects the Biden administration will double down on its existing student loan relief programs and holding institutions accountable for predatory lending. Almost $32 billion in student loans have been canceled for 1.6 million borrowers, including $13 billion related to institutions that took advantage of borrowers, according to Education Department data from last year. (Currently, about 44 million borrowers owe a collective $1.7 trillion in federal student loan debt.)
It’s also worth noting: The court did not dispute that the pandemic created an economic environment that required student debt relief. It just said the authority to provide it lies in Congress.
And perhaps what’s most distressing about today’s decision is that some of Congress’s highest-profile members from Senate Majority Leader Chuck Schumer (D-N.Y.) on down responded to it by asking the Biden administration to take additional action that would immediately be challenged and ultimately overturned.
This penchant for performative politics is exhausting. It speaks to how pessimistic Democrats have become about their ability to navigate the legislative process in the MAGA era. No matter how much confidence the White House projected these past 10 months, President Biden’s plan was probably always going to require a miracle to pass muster with this court’s supermajority.
The fact that the people charged with writing the laws of the land have simplified this issue to one the president can solve through authority the Supreme Court just said his administration doesn’t have lets you know how little power they realize they have to do anything themselves given current makeup in both chambers.
And to be clear, your Supercreator author is not letting congressional Republicans off the hook. They opposed the president’s plan en bloc in part due to the burden of ballooning college costs on future students. But at the same time, they have failed to propose any serious legislation that would make college more affordable or invest in programs like paid family leave, universal pre-K, affordable housing — the list goes on.
Meanwhile, it’s you, if you were counting on the relief cancelation would have provided, who is left to figure it out.
Your Supercreator author is sorry if today’s decision is unsettling. But he also hopes you realize how much power you have to say enough of this shit if you so choose to use it in the next year and a half.