‘This decision is a slap in the face’: the real cost of the US student debt ruling

Millions of Americans were left reeling on Friday after the US supreme court struck down the Biden administration’s plan to forgive $430bn in student debt, stirring anxiety among borrowers just months before student loan payments are set to resume in October.

Related: Supreme court’s student loan decision ‘usurps Congress’s authority,’ says Democrat

“This decision is a slap in the face to millions of Americans who, like me, were told to pursue college and dream of a brighter future, and are now punished for doing so,” said Tim Scalona, a law student at Suffolk University in Boston, who spent months bracing for the ruling. He was keenly aware of the current court’s hostility to student debt forgiveness.

Scalona’s sentiments echoed those of Joe Biden, who said in a briefing shortly after the ruling was announced on Friday: “More homes would have been bought, more businesses would have been started, more couples would have had the confidence to start a family. Millions of people would have felt they could get on with their lives.”

The United States’ $1.75tn student debt crisis harms a whopping 40 million borrowers, who for the past three years have had their payments paused because of the Covid-19 pandemic. Last August, the White House unveiled a plan to forgive $10,000 in student debt for borrowers under a certain income threshold. Pell grant recipients were eligible to receive up to $20,000 in relief, offering a glimmer of hope for low-income borrowers struggling to escape the crushing, sometimes lifelong burden of college debt.

The Biden administration’s debt relief plan hinged on the 2003 Heroes Act –– a law passed in the aftermath of the 11 September 2001 terrorist attacks on the US –– which gives the secretary of education the authority to change student aid program laws when faced with a national emergency. For months, the White House said it was “confident” in the legal authority offered by the Heroes Act, even as the supreme court’s conservative supermajority expressed skepticism during oral arguments in February. But last week, the court ruled that the president had overstepped executive authority in a 6-3 decision that broke predictably along party lines.

The announcement was met with widespread anger from borrowers and working-class Americans, with progressive lawmakers urging the president to release “plan B” for student debt relief.

Vermont senator Bernie Sanders said student debt makes it challenging for millions of Americans to “pay the rent, put food on the table and pay for the basic necessities of life”.

In response, the president outlined a new plan to ease the toll of student debt, this time using the Higher Education Act of 1965, which gives the education secretary the power to “compromise, waive, or release loans under certain circumstances”. Biden also announced plans to enact a 12-month repayment program that would forgive late payments, meaning a borrower’s credit score will not suffer if they miss a payment between October 2023 and 30 September 2024.

“This new path is legally sound,” Biden said Friday. “It’s going to take longer, but, in my view, it’s the best path that remains to provide for as many borrowers as possible with debt relief.”

While borrowers await details about the new debt forgiveness plan, the Biden administration offered another consolation prize: the Department of Education on Friday finalized details of the Saving on a Valuable Education (Save) plan, which would “help the typical borrower save more than $1,000 per year on payments”.

But news of the Save plan was overshadowed by disappointment and anger about the supreme court ruling.

Relieved to hear that there’s a new plan for reducing student debt, Scalona is the first in his family to attend a four-year college and will owe roughly $150,000 in student loans when he graduates law school.

Scalona began dreaming of college as a teenager, when his parents’ home was foreclosed on, forcing his family of nine to move into a cramped hotel room. At school, teachers and guidance counselors encouraged Scalona to focus on college applications.

If he could just work hard in class, Scalona thought, he could enjoy stable housing in the university dorms, and eventually secure an undergraduate degree. Higher education appeared to offer a clear pathway out of poverty.

“Getting good grades and being in class, it was one of the only things I had control over,” he said, adding that when he received his acceptance letter to the University of Massachusetts Amherst, his main concern was shelter.

“There was also this idea that if I just kept working hard in college, I could eventually craft a new beginning for myself,” Scalona said.

Scalona graduated in spring 2020 at the height of the pandemic, facing a shrinking job market with $35,000 in student debt. He thought back to his high school years – reconsidering the advice often repeated by well-meaning teachers and parents.

“I was told, don’t worry about how much debt you rack up, because you’ll be able to get a good job and pay it off,” he said. “Now that debt consumes my every action and thought, that anxiety can be really debilitating.”

Scalona doesn’t begrudge his parents and teachers for encouraging him to pursue higher education. He said the American higher education model is a no-win scenario.

“We have this system where, in order to have the chance to climb the social ladder, to have any economic mobility, people like me have to go into a decade plus of debt,” he said.

Melissa Byrne, a political strategist and organizer who has spent the past decade advocating for sweeping student loan cancellation, is concerned about young borrowers like Scalona.

“I am worried about people losing faith in their government,” Byrne said. “It’s not even that much relief, it’s a very modest amount of relief, a good-faith token to show the government works for them.”

When the White House first unveiled its original debt relief plan last year, many US borrowers, including Guardian readers, said the president had not gone far enough to address the American student debt crisis. Last December, a small contingent of House Democrats introduced a plan to eliminate student loan debt for elderly and disabled Americans.

Representative Jamaal Bowman of New York, who helped draft the legislation, said in a statement last year that Biden’s plan is “an important first step” but “it does not go far enough”.

But progressives’ critiques of the president’s debt relief plan faded in recent months as the supremecourt appeared poised to rule against the White House.

The disconnect between the White House and the more progressive wing of the Democratic party re-emerged in the hours following the ruling. Shortly after the White House briefing, the Democratic congresswoman Alexandria Ocasio-Cortez told CNN that Biden should suspend interest payments during the yearlong “ramp up” period.

Student debt relief advocates like Byrne said the president needs to take decisive action to cancel student debt before payments resume in October. On Friday, Byrne joined a crowd of protesters who gathered outside the supreme court building shortly after the ruling was announced.

“Canceling the debt is the only acceptable solution,” she told the Guardian over the phone outside the building, adding that Democrats could suffer “catastrophic” consequences at the ballot box this fall if loan repayments resume as scheduled.

Byrne added that “ballots and bills don’t mix”, raising the spectre of voter backlash to the resumption of student loan payments.

Related: ‘There’s no way I can pay it’: Americans dread restart of student loan payments

If the supreme court hadn’t intervened, Biden could point to his administration’s student debt relief program as a fulfilled campaign promise. Student debt relief –– not cancellation –– was a centerpiece of Biden’s 2020 presidential bid.

But Byrne cautions against treating student debt forgiveness as a purely political or academic exercise. She began advocating for free public college in 2010 after years of grappling with her own shame for struggling with student loan payments.

Byrne described her decades-long “tour through the debt system”, eventually losing wages because of her student loan debt.

“This is an issue that affects the dignity and livelihood of real people,” she said. “You have a chance at relief and support, and people are playing politics with that. And yes, there are ramifications for that.”