On Friday, June 30th, the Supreme Court (SCOTUS) ended their session with their last cases. Two of the cases addressed challenges to President Biden’s student loan debt relief plan. The first case involved two individuals that sued because their loans did not qualify for loan forgiveness. The high court dismissed this case because it “lacked standing.”
In the second case, SCOTUS ruled that at least one state, Missouri, had standing to bring a lawsuit since they stood to lose money under the debt relief program. Reaching the question of whether President Biden had the authority to use the HEROES Act to erase about $400 billion in student debt, the court ultimately held that this was an illegal use of executive power and overturned the program. The decision immediately ends the debt relief that the Department of Education (ED) approved for 16 million borrowers and the pending applications of millions of others.
Justice Elena Kagan led the dissent, with Justices Sotomayor and Jackson joining, and said that the Court “declines to respect Congress’s decision to give broad emergency powers to the secretary of education. It does not let the political system, with its mechanisms of accountability, operate as normal. It makes itself the decision maker on, of all things, federal student-loan policy. And then, perchance it wonders why it has only compounded the ‘sharp debates’ in the country?”
Still, the Court’s decision only affects Biden’s recently announced debt relief plan and does not change other important relief programs like Public Service Loan Forgiveness (PSLF) – a critical program for educators and public servants.
In response, President Biden announced a “new way forward” on student loan relief and a plan to approach a solution through the Higher Education Act. Acknowledging the hardship that this decision will cause for many American families, the Biden-Harris Administration is creating a temporary “on ramp” to loan repayment so that those that cannot pay their monthly bills will not face the threat of default and potential harm to their credit. The Department of Education has also finalized a new income-driven repayment plan that will reduce monthly payments for undergraduate loans, and for low-income borrowers their new payment will be $0. Borrowers can learn more and check if they qualify at studentaid.gov where they will also find the application later this summer.
Despite this decision, Congress still has the authority to act on student debt relief and college affordability more broadly. Though the Administration has started temporary programs, Congress must come together to support borrowers as the nation continues to recover and create long-term solutions to address college affordability.
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