Supreme Court rules 6-3 to reject Biden’s student loan debt forgiveness plan
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The Biden administration’s initiative to partially relieve billions of dollars of federal student loan debt is unconstitutional, the Supreme Court ruled in a 6-3 decision Friday.
The decision has far-reaching consequences for some 44 million Americans who owe a combined $1.7 trillion for their education, according to the Annie E. Casey Foundation.
Student loans are one of the highest sources of debt for Americans, second only to mortgages. The Biden administration plan would have wiped out more than $400 billion in student loan debt.
The loan forgiveness plan sought to relieve $10,000 of federal student loan debt for borrowers who earn less than $125,000 annually and up to $20,000 for those who went to college on Pell grants.
Chief Justice John Roberts, for the majority, wrote: “The Secretary’s comprehensive debt cancellation plan cannot fairly be called a waiver — it not only nullifies existing provisions, but augments and expands them dramatically.”
“However broad the meaning of ‘waive or modify,’ that language cannot authorize the kind of exhaustive rewriting of the statute that has taken place here,” the opinion stated.
Biden, in a statement, vowed, “This fight is not over.”
Delivering remarks at the White House late Friday afternoon, Biden announced a different path to provide federal student loan debt relief, an approach that would rely on the Higher Education Act of 1965.
Biden said the new approach is consistent with Friday’s Supreme Court ruling “to provide student debt relief to as many borrowers as possible as quickly as possible.”
The law will enable Education Secretary Miguel Cardona to “compromise, waive or release loans under certain circumstances,” the president said. He described the path as “legally sound” but acknowledged it would take longer.
“In my view this is the best path that remains to providing as many borrowers possible with debt relief. I’m directing my team to move as quickly as possible,” Biden said.
Utah educator Sarah Reale, who owes some $40,000 in student loans after earning undergraduate and graduate degrees from a public university, said she was “disappointed in the decision, but I believe in the process and these checks and balances we’re seeing play out.”
Reale, who teaches at Salt Lake Community College and is the college’s director of digital marketing, said the cost of higher education and the burdens on students who seek to improve their lives and circumstances need to be reevaluated.
“Students need access to higher education without the cost and weight of a lifetime of debt,” she said.
The decision means that borrowers targeted by Biden’s plan will receive no relief. Payment obligations paused during the pandemic will start anew in October.
Utah Attorney General Sean Reyes responded to the ruling in a statement: “The idea of forgiving school loans for a select group of college borrowers is unfair and offensive to the countless Americans who avoided loans or who have repaid their own school loans, often at great personal sacrifice and hardship.”
He continued, “The only thing worse than the absurdity of the loan forgiveness program is the illegality of it. By law, any program that cancels $400 billion of outstanding loans is not something the executive branch can decide on its own. No president, whether Republican or Democrat, may take more authority upon himself than the Constitution bestows.”
In the fall of 2022, Nebraska and five other states filed a lawsuit in Eastern Missouri U.S. District Court challenging the forgiveness program, asserting that it violates the separation of powers and Administrative Procedures Act.
The district court dismissed the challenge, finding that the states lacked judicial standing to sue. The 8th Circuit Court of Appeals enjoined the forgiveness program pending the appeal.
The Supreme Court granted certiorari and heard arguments in Biden v. Nebraska in February, announcing its decision Friday.
The majority opinion said the Education Department overreached statutory authority when it offered waivers.
“From a few narrowly delineated situations specified by Congress, the Secretary has expanded forgiveness to nearly every borrower in the country. The Secretary’s plan has ‘modified’ the cited provisions (of the statute) only in the same sense that the French Revolution ‘modified’ the status of the French nobility — it has abolished them and supplanted them with a new regime entirely.”
Justice Elena Kagan, in a dissenting opinion, wrote that the Supreme Court “acts as though it is an arbiter of political and policy disputes, rather than of cases and controversies.”
Kagan wrote that the Supreme Court “once again” substituted “itself for Congress and the executive branch — and the hundreds of millions of people they represent — in making this nation’s most important, as well as most contested, policy decisions.”
Patrick Holman-Hart, another Utahn with student loan debt, said the Supreme Court’s decision was “disappointing” and will have far-reaching impacts for individuals and households.
“For young professionals like myself, we’ve worked hard to do what we can to succeed and taking out loans has been one of, if not the only ways, to be able to attend college because of family income and circumstances. Costs have skyrocketed and a college education isn’t just something you can work your way through anymore,” he said.
Holman-Hart said he hopes that the Biden administration will develop solutions and options to make repayment viable.
Christopher Peterson, professor in the University of Utah’s S.J. Quinney College of Law, said one frustration with the ruling is, while the majority opinion said the Biden administration lacked authority under the statute to provide broad relief, the Supreme Court “didn’t really give much guidance on what kind of a modification or waiver it would deem to be permissible.”
Congress could, conceivably, modify the statute, but that appears unlikely, given the deep divisions between and within the legislative bodies, he said.
“It’s difficult to get anything through Congress, especially in particular the U.S. Senate, where most changes in the law, you have to have 60 votes, not 50 or 51. It’s difficult for 60 U.S. senators to ever agree on anything in this day and age,” he said.
Utah’s senators, meanwhile, hailed the ruling.
Sen. Mitt Romney, R-Utah, said the Biden administration’s student loan forgiveness plan was “an unfair play to induce voters” that has now been blocked by the Supreme Court as “executive overreach.”
Romney’s statement continued, “Instead of working toward real bipartisan solutions to lower higher education costs, the Biden administration chose a partisan approach that — as the Supreme Court has ruled today — was outside the bounds of its authority and ultimately unsuccessful in supporting our students.”
Sen. Mike Lee, R-Utah, said the Biden v. Nebraska decision was a “clear victory over executive overreach, affirming that President Biden’s student loan scheme was fundamentally unconstitutional.”
Lee said the Supreme Court “lifted a $400 billion burden off the shoulders of the hard-working Americans who diligently paid off their student loan obligations or decided to forego higher education. Thankfully, the Supreme Court was able to check this unbridled overreach and ensure that this foray into socialized higher education will not stand.”
Biden’s statement said, “The hypocrisy of Republican elected officials is stunning. They had no problem with billions in pandemic-related loans to businesses — including hundreds of thousands and in some cases millions of dollars for their own businesses. And those loans were forgiven. But when it came to providing relief to millions of hard-working Americans, they did everything in their power to stop it.”
In August 2022, Cardona attempted to issue loan forgiveness under the HEROES Act, a post-9/11 statute enacted to modify or waive student loan requirements for individuals in military service.
According to an earlier statement from the Utah Attorney General’s Office, which helped author two friend-of-the-court briefs submitted on behalf of 17 states, “The states argued that the HEROES Act does not authorize the Secretary of Education to issue mass cancellations of student loans. The HEROES Act of 2003 only permits the Secretary of Education to waive or modify student loan requirements in limited circumstances. The Secretary’s attempt to exercise power of such vast economic and political significance requires clear Congressional authorization.”
According to public opinion polls conducted for the Deseret News and the Hinckley Institute of Politics, a majority of Utahns disapproved of the Biden administration’s plan for partial loan forgiveness.
Fifty-five percent of 801 registered Utah voters polled by Dan Jones & Associates in March said they disapproved of the Biden administration’s plan for partial loan forgiveness, while 42% said they approved and 3% said they “don’t know.”
The poll, conducted March 14-22, 2023, had a margin of error of plus or minus 3.46 percentage points.
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While the court’s ruling has implications for thousands of individual Utah borrowers, it is unclear what direct impact the decision poses for the state.
The Utah Board of Higher Education voted in 2021 to sell the Federal Family Education Loan Program portfolio administered by the Utah Higher Education Assistance Authority, which means the state is no longer in the student loan processing business.
Proceeds from the sale have been placed in a legislatively created permanent endowment that will fund college scholarships and other programs through interest earnings. At the time, the proceeds of the sale of the portfolio were estimated to be $260 million and $300 million.
