Supreme Court rejects Biden student loan forgiveness plan

President Biden does not have authority to implement his roughly $400 billion program to forgive student loan debt, the Supreme Court ruled Friday, issuing another blow to the administration’s bold claims of power in the final decision of the court’s term.

By afternoon, Biden announced a “new path” for loan forgiveness and started a federal rulemaking process, which could take months. He also announced plans for a temporary, 12-month “ramp” repayment program for student loan borrowers. Under this program, the Education Department will not refer borrowers who miss loan payments to credit agencies for 12 months, Biden said, “to give them a chance to get back up and running.”

“I’m never going to stop fighting for you,” Biden said in remarks at the White House. “We’ll use every tool at our disposal to get you the student debt relief you need and reach your dreams. It’s good for the economy, it’s good for the country.”

The quick response highlighted the political stakes of the issue — and was probably a sign that the White House had worried the Supreme Court would not sanction the far-reaching program.

The challenge brought together controversial issues: an ambitious program aimed at fulfilling a campaign promise for Biden’s political base; heightened suspicion by the court’s conservative supermajority of the ability of federal agencies to act without specific congressional authorization; and the power of Republican-led states to use the judiciary to stop a president’s priorities before they take effect.

Biden’s program would have affected up to 40 million borrowers, about half of whom were eligible to have their loan balances erased. While loan repayments have been paused because of the coronavirus pandemic, they are set to resume this fall. The vote to strike the program down was 6-3 along ideological lines, with conservative Chief Justice John G. Roberts Jr. writing for the majority.

Biden contended that his administration had the authority to forgive student loan debt under the Higher Education Relief Opportunities for Students Act of 2003. That law allows the education secretary to waive or modify loan provisions in response to a national emergency, such as the pandemic.

But the majority said Education Secretary Miguel Cardona’s plan rested on an “exhaustive rewriting” of the statute.

“The Secretary asserts that the HEROES Act grants him the authority to cancel $430 billion of student loan principal. It does not,” Roberts wrote. “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 was joined by Justices Clarence Thomas, Samuel A. Alito Jr., Neil M. Gorsuch, Brett M. Kavanaugh and Amy Coney Barrett.

Biden and Cardona had proposed a plan that would eliminate up to $10,000 of student debt for borrowers earning up to $125,000 annually, or up to $250,000 for married couples. Those who received Pell Grants, a form of financial aid for low- and middle-income students, would be eligible for an additional $10,000 in forgiveness.

U.S. Solicitor General Elizabeth B. Prelogar, who defended the program at oral arguments, said Cardona’s actions were not only justified by the law, they were also exactly what Congress had in mind when it passed the Heroes Act in the wake of the 9/11 terrorist attacks.

The court’s three liberals agreed.

In a dissent from the majority opinion, Justice Elena Kagan said the court was making national policy in place of Congress and the executive branch.

“Congress authorized the forgiveness plan (among many other actions); the Secretary put it in place; and the President would have been accountable for its success or failure,” Kagan wrote, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson. “But this Court today decides that some 40 million Americans will not receive the benefits the plan provides, because (so says the Court) that assistance is too ‘significan[t].’ ”

Biden said the court was wrongly eliminating “the lifeline tens of millions of hardworking Americans needed as they try to recover from a once-in-a-century pandemic.”

“The hypocrisy of Republican elected officials is stunning,” the president said in a statement. “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.”

The justices have rejected the administration’s expansive arguments in the past. The court lifted a pandemic-era moratorium on rental evictions put in place by the Centers for Disease Control and Prevention. It threw out a coronavirus vaccination-or-testing mandate imposed on large businesses by the Occupational Safety and Health Administration. And in a ruling unrelated to the pandemic, it cited the “major questions” doctrine to limit the Environmental Protection Agency’s options for combating climate change.

The challenge to the student loan program was brought by six Republican-led states in one case, and two individuals from Texas in another. In both cases, the Justice Department questioned whether the plaintiffs had legal standing to file their suits. The court dismissed the challenge from Texas but said Missouri had standing to bring the case because of a state-created organization that deals with student loans.

Nebraska Attorney General Mike Hilgers (R), who represents one of the challenger states, said in a statement that the justices had “stopped the Biden Administration’s breathtaking attempt to grab power.” Hilgers called the ruling a “timely reminder that the President is no king. He must work with, and not around, Congress.”

Kagan said her conservative colleagues strained to find a way to vote against Biden’s plan.

“In adjudicating Missouri’s claim, the majority reaches out to decide a matter it has no business deciding,” she wrote. “It blows through a constitutional guardrail intended to keep courts acting like courts.”

Roberts seemed sensitive to the criticism and quick to rebut it.

“It has become a disturbing feature of some recent opinions to criticize the decisions with which they disagree as going beyond the proper role of the judiciary,” he wrote. “We do not mistake this plainly heartfelt disagreement for disparagement. It is important that the public not be misled either. Any such misperception would be harmful to this institution and our country.”

Roberts said the majority “employed the traditional tools of judicial decisionmaking” in finding that the administration was exploiting vague language in the Heroes Act to move forward with a plan Congress probably would not authorize.

“From a few narrowly delineated situations specified by Congress, the Secretary has expanded forgiveness to nearly every borrower in the country,” Roberts wrote. “The Secretary’s plan has ‘modified’ the cited provisions 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.”

Roberts was paraphrasing a line from an unrelated Supreme Court opinion by the late Justice Antonin Scalia.

Indeed, Biden and other Democratic officials once questioned whether the law provided such leeway. Roberts quoted former House speaker Nancy Pelosi (D-Calif.) to that effect.

And Biden’s debt relief program has been a divisive issue on Capitol Hill. On June 7, the president vetoed a Republican-led resolution to strike down the program and restart loan payments for tens of millions of borrowers. The measure had passed the Senate with the backing of Sens. Joe Manchin III (D-W.Va.), Jon Tester (D-Mont.) and Kyrsten Sinema (I-Ariz.), illustrating the likely difficulty of getting any future debt relief plan through Congress.

Senate Minority Leader Mitch McConnell (R-Ky.) welcomed the court’s decision Friday. “The American people know that the Biden Administration’s student loan socialism plan would be a raw deal for hardworking taxpayers,” he said. “Now that the Supreme Court has rejected the Administration’s position in Biden v. Nebraska, they can know that it’s illegal.”

The administration’s best hope at the Supreme Court was to convince the justices that none of the challengers had really been injured by the program and thus did not have legal standing to sue. Challengers must show they have suffered a specific, rather than generalized, injury that could be remedied by relief from a federal court. It was not enough just to object to the size of the program or even to allege that the president had exceeded his authority.

A panel of the U.S. Court of Appeals for the 8th Circuit had found that the Missouri Higher Education Loan Authority, a quasi-independent entity, could suffer losses from Biden’s program that would hurt Missouri, one of the challenger states. A different court said the two borrowers, Myra Brown and Alexander Taylor, had standing to proceed because Taylor didn’t qualify for $20,000 of forgiveness, while Brown was ineligible altogether.

The court unanimously dismissed the suit from the individuals, saying they did not have standing.

But Roberts said Missouri’s challenge could proceed. “The Secretary’s plan harms MOHELA in the performance of its public function and so directly harms the State that created and controls MOHELA,” he wrote. “Missouri thus has suffered an injury in fact sufficient to give it standing to challenge the Secretary’s plan.”

Kagan said the majority was overextending itself to find legal standing. “Is there a person in America who thinks Missouri is here because it is worried about MOHELA’s loss of loan-servicing fees? I would like to meet him,” she wrote. Instead, she argued, Missouri and the other states were at the court because they thought Biden had implemented a bad policy.

“But that question is not what this Court sits to decide,” she added.

On the merits, Kagan and her fellow dissenters said both Biden and President Donald Trump used the broad wording of the law to shape moratoriums on loan repayment. “The HEROES Act was designed to deal with national emergencies — typically major in scope, often unpredictable in nature,” she wrote.

She noted that the majority was objecting to the program’s size and voicing concerns about administrative power. “Thus the Court once again substitutes 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,” Kagan wrote.

The legal battles have left millions of student loan borrowers in limbo. More than half of eligible people had applied for the forgiveness program before it was halted by the courts, with the Education Department approving some 16 million applications.

The department shut down the application process before Sinyetta Hill, 22, was able to apply, but the newly minted University of Wisconsin graduate had remained hopeful that the court would uphold Biden’s program.

As a Pell Grant recipient, she would have been eligible to have all $20,000 of her student loan debt forgiven. She will have to start repaying that balance this fall, just as she prepares to apply to law school and take on even more debt.

“It’s devastating because I had so much optimism that this decision would go through,” said Hill, who earned a bachelor’s in political science and philosophy this spring. “Now students like me are still stuck in a rut.”

The debt relief decision came a day after the court struck down affirmative action admissions policies as unconstitutional, and student advocates said both rulings will erode equity advances for Black students. The restrictions on affirmative action could make it more difficult for Black students to attend competitive colleges, many of which offer substantial financial aid to reduce the need to borrow. Striking down the debt cancellation plan, meanwhile, will deny Black borrowers, who hold a disproportionate share of student loan debt, a chance to alleviate the burden.

“Within the last 24 hours, the Supreme Court has severely limited access to prosperity for Black, Brown and other minorities,” said Chavis Jones, associate counsel with the Lawyers Committee for Civil Rights Under Law. “We must ensure [these] students have equal access to institutions of higher education … and access to economic prosperity once they leave those institutions.”

The cases are Biden v. Nebraska and U.S. Department of Education v. Brown.