The U.S. Supreme Court struck down President Joe Biden’s plan that would have forgiven up to $20,000 worth of student loan debt per borrower.
The justices voted 6-3 in favor of Republican-led states that sued the federal government over the program.
Under the Secretary of Education’s plan, announced in August 2022, people who received a Pell Grant would have been eligible for up to $20,000 in student loan forgiveness. Those who didn’t receive a Pell Grant would have received up to $10,000 in debt relief.
"Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree," Chief Justice John Roberts said in the opinion of the court.
The Biden administration contended that Congress gave the executive branch authority in 2003, with the passage of the Heroes Act, to reduce or eliminate student loan debt during a national emergency. At the time President Biden announced the plan, the country was in a national emergency due to the COVID-19 pandemic.
The six states that sued the Biden administration were Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina.
Roberts specifically noted that Missouri had standing to sue because it would have been out an estimated $44 million a year in fees if the relief program went forward.
Justine Elena Kagan claimed the states’ arguments were not based in law.
“They oppose the Secretary’s loan cancellation plan on varied policy and legal grounds. But as everyone agrees, those objections are just general grievances; they do not show the particularized injury needed to bring suit,” Kagan wrote in her dissent.
In a separate case before the Supreme Court, two student loan borrowers sued, claiming the program wasn’t fair because of eligibility requirements and the fact that it only addresses government-backed loans and not private loans.
The court unanimously rejected their argument.
The decision had little impact as the court sided with the Republican-led states and achieved the same requested outcome — blocking the program.
Up to 43 million borrowers would have benefited from the plan, the Biden administration said.
They will now be forced to continue repayments of their loans this year. The pause that was in place during the pandemic is set to expire at the end of August.
Get ready: Student loan interest, payments set to resume
Payments won't come out automatically, and there are options to help lower monthly payments when they resume later this year.
