The Supreme Court rejects Biden's plan to wipe away $400 billion in student loans
A sign reading "cancel student debt" is seen outside the Supreme Court, Friday, June 30, 2023, in Washington. A sharply divided Supreme Court has ruled that the Biden administration overstepped its authority in trying to cancel or reduce student loans for millions of Americans. Conservative justices were in the majority in Friday’s 6-3 decision that effectively killed the $400 billion plan that President Joe Biden announced last year. (AP Photo/Mariam Zuhaib)
WASHINGTON (AP) — A sharply divided Supreme Court ruled Friday that the Biden administration overstepped its authority in trying to cancel or reduce student loans for millions of Americans.
The 6-3 decision, with conservative justices in the majority, effectively killed the $400 billion plan, announced by President Joe Biden last year, and left borrowers on the hook for repayments that are expected to resume by late summer.
The court held that the administration needs Congress' endorsement before undertaking so costly a program. The majority rejected arguments that a bipartisan 2003 law dealing with student loans, known as the HEROES Act, gave Biden the power he claimed.
"Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree," Chief Justice John Roberts wrote for the court.
Justice Elena Kagan wrote in a dissent, joined by the court's two other liberals, that the majority of the court "overrides the combined judgment of the Legislative and Executive Branches, with the consequence of eliminating loan forgiveness for 43 million Americans."
Loan repayments are expected to resume by late August under a schedule initially set by the administration and included in the agreement to raise the debt ceiling. Payments have been on hold since the start of the coronavirus pandemic more than three years ago.
The forgiveness program would have canceled $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would have had an additional $10,000 in debt forgiven.
"Today’s Supreme Court ruling rejecting President Biden’s student loan bailout is a victory for hard-working American taxpayers and the rule of law in America," said Sen. Steve Daines, R-Montana, in a statement. "At its core, this bailout was one of the most extreme examples of executive overreach in history. The President himself even said he wasn’t sure he had the power to forgive $400 billion in student loan relief."
Twenty-six million people had applied for relief and 43 million would have been eligible, the administration said. The cost was estimated at $400 billion over 30 years.