Supreme Court Rejects Biden’s $400 Billion Student Loan Forgiveness Plan

On Friday, the Supreme Court determined that the Biden administration exceeded its powers in its attempt to forgive or lessen student loans for millions of US citizens.

The conservative justices dominated the 6-3 verdict, effectively quashing the $400 billion scheme introduced by President Joe Biden the previous year. Consequently, borrowers will likely need to restart repayments by late summer.

The court decided that before implementing such an expensive program, the administration requires congressional approval. The majority dismissed the claim that the bipartisan 2003 student loan legislation, known as the HEROES Act, granted Biden the authority he sought.

Chief Justice John Roberts, penning the court’s decision, concurred with the six states who contended that the HEROES Act did not authorize the loan forgiveness scheme.

Justice Elena Kagan, in a dissent joined by the court’s other two liberals, argued that the majority was overriding the joint decision of the legislative and executive branches, thereby denying loan forgiveness for 43 million Americans.

Repayments of loans are anticipated to recommence by late August, as initially outlined by the administration and included in the agreement to raise the debt ceiling. Payments have been suspended since the onset of the coronavirus pandemic over three years ago.

Under the forgiveness scheme, individuals earning less than $125,000, or households with an income under $250,000, would have seen $10,000 of their student loan debt canceled. Additionally, Pell Grant recipients, who generally exhibit greater financial need, would have had a further $10,000 of their debt pardoned.

According to the administration, twenty-six million people had submitted applications for relief, and 43 million would have been eligible. The estimated cost of the program was projected to be $400 billion spread over 30 years.