Supreme Court blocks student loan forgiveness plan, dealing blow to Biden

2024-12-25 23:51:25 source:lotradecoin versus binance comparison category:reviews

Washington — The Supreme Court on Friday invalidated President Biden's student loan forgiveness plan, ruling that a 2003 federal law does not allow the program to wipe out nearly half-a-trillion dollars in debt.

The 6-3 decision by the court's conservative majority derails a major campaign pledge from the president, denying relief to roughly 40 million Americans who stood to have up to $20,000 in student debt wiped away under the plan.

In a statement, the president said he believed the decision was "wrong" and "disappointing." Mr. Biden then announced his administration will pursue debt relief through the Higher Education Act and has created a temporary "on-ramp" period, during which borrowers will not be considered in default for late or missed payments, beginning Oct. 1 and lasting for one year.

"I will stop at nothing to find other ways to deliver relief to hard-working middle-class families," Mr. Biden said. "My Administration will continue to work to bring the promise of higher education to every American."

The court's student loan ruling

Before striking down the plan, the Supreme Court first said Missouri, one of the six states that challenged the lawfulness of the plan, had the right to sue, known as legal standing. That finding allowed the court to consider whether the secretary of education had the power to forgive student loan debt under a law known as the HEROES Act.

The court, in a majority opinion authored by Chief Justice John Roberts, said the law does not grant the secretary that authority.

"We hold today that the act allows the secretary to 'waive or modify' existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up," Roberts wrote.

The court invoked the so-called "major questions" doctrine in part of its ruling, a legal theory that holds there must be clear congressional authorization for an executive branch agency to decide an issue of "vast economic or political significance."

The "economic and political significance" of the loan forgiveness plan, Roberts wrote, "is staggering by any measure."

"Today, we have concluded that an instrumentality created by Missouri, governed by Missouri, and answerable to Missouri is indeed part of Missouri; that the words 'waive or modify' do not mean 'completely rewrite'; and that our precedent — old and new—requires that Congress speak clearly before a Department Secretary can unilaterally alter large sections of the American economy," he concluded.

Roberts ended his opinion by noting that the disagreement among the court's members should not be mistaken for disparagement. "It is important that the public not be misled either," he cautioned. "Any such misperception would be harmful to this institution and our country."

Justice Elena Kagan authored the dissenting opinion, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson and summarized from the bench. "In every respect, the court today exceeds its proper, limited role in our nation's governance," she wrote.

The dissenting justices split from the majority regarding not only the legality of the relief plan, but also with its finding that the states had the right to sue. In deciding the case at all, Kagan said the court overreached.

"The result here is that the Court substitutes itself for Congress and the Executive Branch in making national policy about student-loan forgiveness," Kagan said.

In a separate opinion, the Supreme Court unanimously said a pair of Texas borrowers who also challenged the program lacked standing to bring their suit, and tossed out their case.

The student loan relief plan

The decision from the high court is a major defeat for Mr. Biden as he pursues reelection. He pledged during his 2020 campaign that his administration would forgive at least $10,000 of federal student loan debt.

Mr. Biden moved to fulfill that promise last August, when he announced his plan to forgive up to $10,000 in student debt for eligible borrowers earning less than $125,000 annually. Qualifying Pell Grant recipients, who are students with the greatest financial need, would have had up to an additional $10,000 in relief.

Roughly 40 million Americans were eligible for the relief announced by the president last August, 20 million of whom would have had their loan balances erased altogether, according to White House estimates. More than 26.2 million people applied for the program, and over 16 million of those applications were approved before the Department of Education was forced to stop accepting applications due to the legal challenges.

The Trump and Biden administrations paused federal student-loan payments during the COVID-19 pandemic, and borrowers will resume making payments this fall.

The Department of Education relied on the 2003 HEROES Act as its legal justification for wiping out roughly $430 billion in debt. The law authorizes the education secretary to "waive or modify" student financial assistance programs for borrowers "in connection" with a national emergency, such as the pandemic. 

Legal challenges

A group of six red states — Arkansas, Iowa, Kansas, Kentucky, Missouri and South Carolina — as well as the two borrowers from Texas filed two separate lawsuits, arguing the debt relief exceeded the administration's authority.

In the challenge from the states, a federal district court in St. Louis dismissed the case, finding they did not have the legal standing to bring the suit. But an appeals court blocked the loan forgiveness program, finding that Missouri was harmed from the financial losses the debt cancellation inflicts.

The appeals court focused its decision on the Higher Education Loan Authority of the State of Missouri, or MOHELA, a state-created entity that services federal student loans, finding that the financial impact on the loan servicer due to the debt discharge threatened financial harm to Missouri.

For the second case from Texas brought by borrowers Myra Brown and Alexander Taylor, dubbed Dept. of Education v. Brown, a federal district court found the borrowers satisfied the requirements for standing and ruled the plan is an unconstitutional exercise of Congress's legislative power. A federal appeals court declined to reinstate the program.

Brown does not qualify for debt relief, as her loans are held by commercial entities, and Taylor is eligible for $10,000 in loan forgiveness.

More:reviews

Recommend

Dick Van Dyke credits neighbors with saving his life and home during Malibu fire

Hollywood legend Dick Van Dyke and his family are alive and well thanks to some quick-thinking neigh

He got an unexplained $250,000 payment from Google. The company says it was a mistake

Sam Curry, a self-described hacker, says he was mysteriously paid $249,999.99 by Google last month a

Gina Rodriguez Gives Birth, Welcomes First Baby With Joe LoCicero

Gina Rodriguez is adding a new title to her resume: mom.The Someone Great actress and husband Joe Lo