On June 30, in Biden v. Nebraska, the Supreme Court ruled against the Biden administration’s student loan relief plan in a 6-3 decision. The plan, which was estimated to impact more than $430 billion of student loan principal, would have canceled student loan debt for more than 40 million borrowers.
A student loan payment pause was implemented in response to COVID-19. In August 2022, in an effort to ease the transition back to repayment, the Department of Education announced it would provide loan forgiveness of up to $20,000 for Pell Grant recipients and up to $10,000 for non-Pell Grant recipients with student loans held by the Department of Education.
Justices Roberts, Thomas, Alito, Gorsuch, Kavanaugh and Coney Barrett found that Congress had not given the executive branch authority to cancel student loan principal, instead finding that the Department of Education’s powers were limited to waiving or modifying “existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act.” The Majority stated that the Secretary cannot “rewrite the statute from the ground up.” Justices Sotomayor, Kagan and Jackson dissented.
The Biden administration argued that the HEROES Act of 2003, which authorized the Secretary of Education to modify requirements and regulations applicable to student financial assistance programs for individuals in the military or who suffered economic hardship as a result of a national emergency, would permit their plan to relieve student debt. The administration argued that the COVID-19 pandemic was a national emergency that met that criteria and allowed for the forgiveness plan. The Court’s conservative majority rejected that claim.
The mixed reaction from policy-makers is not unexpected. As stated in our previous blog post on the announcement of the Federal Student Loan Forgiveness Plan and Final Repayment Moratorium Extension, many Democrats applauded the plan, and Republicans strongly opposed it. President Biden released a statement calling the decision “disappointing,” while noting that individuals should not “lose sight of the progress” that has been made to increase the Pell Grant, creating a new debt repayment plan and other accomplishments.
