Updated on Friday, June 30 at 12:45 p.m.
WASHINGTON — The U.S. Supreme Court on Friday ruled that the Biden administration does not have the legal authority to enact a one-time student debt relief program, dealing a blow to the 40 million Americans who would have qualified.
Last year, the Biden Administration rolled out a debt forgiveness plan for borrowers with federal student loans that would be a one-time cancellation of up to $10,000.
Those student loan borrowers who had received Pell Grants — federal aid to help low-income students pay for higher education — could qualify for an additional $10,000 in forgiveness, a policy that was meant to provide equitable relief to Black borrowers.
In a 6-3 decision, Chief Justice John Roberts, writing for the conservative majority of the court, deemed that a loan servicer in Missouri, the Higher Education Loan Authority, known as MOHELA, would have its revenue threatened by the debt relief.
The case was filed by Republican attorneys general of Nebraska, Missouri, Arkansas, Kansas and South Carolina, along with Iowa Republican Gov. Kim Reynolds’ general counsel, and they argued the Biden administration overstepped its reach and that MOHELA would be harmed by a loss of profits from federal student loan debt relief.
The court majority agreed. “(T)he Secretary’s plan would cost MOHELA, a nonprofit government corporation created by Missouri to participate in the student loan market, an estimated $44 million a year in fees,” Roberts wrote.
“MOHELA is, by law and function, an instrumentality of Missouri: Labeled an ‘instrumentality’ by the State, it was created by the State, is supervised by the State, and serves a public function. The harm to MOHELA in the performance of its public function is necessarily a direct injury to Missouri itself.”
President Joe Biden said in a statement that “the fight is not over” to help borrowers.
“I believe that the Court’s decision to strike down our student debt relief plan is wrong,” Biden said in a statement, adding that his administration plans to announce more efforts to help borrowers.
“I will stop at nothing to find other ways to deliver relief to hard-working middle-class families,” he said. “My Administration will continue to work to bring the promise of higher education to every American.”
Republicans celebrated the decision. Nebraska Attorney General Mike Hilgers and Missouri Attorney General Andrew Bailey held a Friday news conference.
Bailey said the case was about “protecting working Missouri families from getting saddled with Ivy League debt,” and about “basic fairness.”
“I paid for my college with blood, sweat and tears, and service to my country, and it’s only fair that working families not be stuck with other people’s debt,” Bailey said.
All three liberal Justices, Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson, dissented. Kagan, writing for the dissenters, did not agree with the finding the states had standing.
“The plaintiffs here are six States: Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina,” Kagan wrote. “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.”
The justices unanimously decided that a second case challenging the debt relief plan did not have legal standing. That case was brought by a two people with student loan debt who would either partially or entirely not qualify for the White House program. The case was backed by the conservative advocacy group the Job Creators Network Foundation.
Turbulent history for student debt relief
The Biden administration’s student debt relief plan has not only been challenged in the courts by Republicans, but also in Congress. The House and the Senate voted to overturn the policy through the Congressional Review Act, but Biden vetoed the resolution.
More than 16 million borrowers had already been approved for relief, according to the Department of Education, before the agency was blocked from accepting more applicants following a nationwide injunction.
Repayments on federal student loans are set to resume Oct. 1, but interest accrual will begin starting Sept. 1, according to the Department of Education.
The Department of Education did not respond to a States Newsroom request for comment, but said on its website that the agency is “reviewing the Court’s decision to determine next steps.”
More than 43 million Americans have student loan debt, and the Federal Reserve estimates that the total U.S. student loan debt is more than $1.76 trillion.
A law passed in early June to address the nation’s debt ceiling codified that the White House would not be able to extend the pause on repayment for federal student loans unless approved by Congress.
For three years, there has been a pause on federal student loan repayment due to the coronavirus pandemic that was initially put in place by the Trump administration and extended by the Biden administration.
In a statement, Iowa’s Reynolds said the decision “affirms what Iowans have believed this entire time: the hard-working men and women of this country should not bear the burden of paying off others’ loans.”
“This plan belittles Iowans who paid their own debt or chose not to pursue a traditional four-year degree,” she said.
HEROES Act central to ruling
Roberts disagreed with the Biden administration’s argument that the federal HEROES Act allowed the secretary of education “to cancel $430 billion of student loan principal.” The HEROES Act, first enacted 20 years ago, was used by the Trump administration to suspend repayments on federal student loans at the onset of the pandemic.
During oral arguments in March, U.S. Solicitor General Elizabeth B. Prelogar — representing the Biden administration — argued that under the HEROES Act, the secretary of education can “waive or modify any statutory or regulatory provision” to help borrowers in a national emergency, such as the coronavirus pandemic.
Roberts said the administration went too far. “We hold today that the Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up,” Roberts wrote.
Roberts invoked the “major questions doctrine,” which means that if Congress wants to give an agency, such as the Department of Education, the power to make a decision of “economic and political significance,” it has to explicitly say so.
Roberts wrote that “the question here is not whether something should be done; it is who has the authority to do it.”
Congress is unlikely to act on debt relief anytime soon, with control split between a Republican House and a Democratic Senate.
Senate Majority Leader Chuck Schumer, a New York Democrat, said in a statement that he was disappointed in the decision.
“This disappointing and cruel ruling shows the callousness of the MAGA Republican-controlled Supreme Court,” he said. “The hypocrisy is clear: as justices accept lavish, six-figure gifts, they don’t dare to help Americans saddled with student loan debt, instead siding with the powerful, big-monied interests.”
He called on the Biden administration to “do everything in its power to deliver for millions of working- and middle-class Americans struggling with student loan debt.”
Congressional Republicans hailed the decision.
Senate Minority Leader Mitch McConnell, a Kentucky Republican, said in a statement that the court’s decision “deals a heavy blow to Democrats’ distorted and outsized view of executive power.”
“The President of the United States cannot hijack twenty-year-old emergency powers to pad the pockets of his high-earning base and make suckers out of working families who choose not to take on student debt,” McConnell said.
GOP Sen. Bill Cassidy of Louisiana, who introduced the Congressional Review Act resolution to overturn the Biden administration’s debt relief policy, said in a statement that the court came to the right conclusion.
“This is an obvious but welcomed ruling,” he said. “President Biden’s student loan scheme does not ‘forgive’ debt, but unfairly transfers the burden from those who willingly took out loans onto those who chose not to attend college or already fulfilled their commitment to pay off their loans.”
But Democratic Sen. Raphael Warnock of Georgia said in a statement that the news was devastating.
“The Supreme Court’s decision to usurp the President’s executive authority to provide meaningful debt relief isn’t just bad for the everyday, hardworking Georgians who are being held back financially by crippling debt, but it’s also terrible for our entire economy and sets a dangerous precedent that binds the hands of the elected executive from taking action that reflects the will of the people,” he said.
The chair of the House Education and Workforce Committee, Rep. Virginia Foxx of North Carolina, said in a statement that she was pleased the Supreme Court had held the Biden administration accountable.
“Mr. President, good riddance to your illegal, economically disastrous taxpayer-funded bailout for the wealthy,” she said. ““This ‘one-time’ ‘cancellation’ of student loan debt was subterfuge for the radical Left’s ultimate goal of taxpayer-funded ‘free’ college for all.”
Foxx has held several hearings about the Biden administration’s student debt relief program, and has spoken against the policy since it was announced.
The top Democrat on the House Education and Workforce Committee, Bobby Scott of Virginia, said in a statement that millions of borrowers will be denied “the relief they need to make ends meet.”
“A college education should not depend on how much money a student’s parents make,” he said.
Scott said moving forward, Democrats should work to advance legislation to increase the funding of Pell Grants, lower interest rates for student loans and “make other critical reforms to make our student loan system work for students.”
Rep. Frederica S. Wilson of Florida, who is the top Democrat on the Higher Education and Workforce Development Subcommittee, said in a statement that the decision will perpetuate inequality and continue to harm vulnerable borrowers of color.
“It is no secret that the pandemic has disproportionately impacted communities of color, exacerbating inequalities,” she said. “Student debt cancellation would have been a bold step toward narrowing the racial wealth gap.”
The decision is likely to become an issue in the race for the presidency. Youth organizations that back student debt relief said they will use the ruling to rally support.
Cristina Tzintzún Ramirez, president of NextGen America, one of the largest youth voting organizations, said in a statement that “young voters will remember this come 2024.”
She added that, “heading into 2024, we will not forget the people who fight for us everyday and the people who would rather protect the pockets of shady billionaires.”
Another Gen Z-led organization, Voters of Tomorrow, echoed similar sentiments.
“We hope that the Biden Administration is able to negotiate a deal through Congress or take executive action to relieve student debt for all Americans,” the group said in a statement. “While we know it will be difficult with far-right politicians who have championed the removal of the plan, it is what is needed to remove the burden from millions of Americans.”
Kendra Cotton, the CEO of New Georgia Project, a voter mobilization group, said in a statement that in “the wake of this decision, New Georgia Project will double down on our efforts to connect the issues Black, brown, and young Georgians need to secure their economic futures — an increased minimum wage, better access to healthcare, and more affordable housing — to the importance of voting.”
GOP presidential candidates, such as Nikki Haley, praised the decision as stopping executive overreach from the White House.
“A president cannot just wave his hand and eliminate loans for students he favors, while leaving out all those who worked hard to pay back their loans or made other career choices,” she said.
“The Supreme Court was right to throw out Joe Biden’s power grab.”
Another presidential candidate, Republican Sen. Tim Scott of South Carolina, released a video statement, arguing that there are other pathways to the “American Dream” that don’t require a college degree.
“We need more welders, carpenters and electricians,” he said. “These are the jobs that built America, and these are the jobs liberal elites can’t ship to China.”
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originally published at https%3A%2F%2Fwisconsinexaminer.com%2F2023%2F06%2F30%2Fus-supreme-court-rules-against-biden-administration-student-loan-debt-relief-plan%2F by Ariana Figueroa