The Supreme Court of the United States has rejected US President Joe Biden’s proposal to forgive billions in student loan.
The 6-3 decision effectively nullifies the plan, which would have forgiven approximately $10,000 per creditor and up to $20,000 in some instances.
More than forty million Americans will be affected by the decision.
Mr. Biden stated that it has left the American people “angry.” He promised to implement new measures to reduce student debt using existing laws.
The proposal for loan forgiveness has been in limbo since some conservative states filed a lawsuit against the president, claiming he exceeded his authority. Supreme Court concurred.
In response to the decision, Mr. Biden made a statement from the White House, stating, “I am aware that millions of Americans feel disappointed, disheartened, and even a little bit furious. I must confess I do too.”
However, he pledged to work with the Department of Education to discover alternative ways to assist individuals with their financial burdens.
“The decision made today has closed one path. Now, we’ll begin a new one,” he said.
In the past 15 years, the total federal student debt has more than tripled, from approximately $500 billion in 2007 to $1.6 trillion today.
The US Treasury took a $430bn charge last year to cover $300m in costs associated with the loan forgiveness program and additional costs associated with the extension of a Covid-era payment moratorium through the end of the year.
The Biden administration confronted plaintiffs in two distinct cases, one involving six Republican-led states (Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina) and another involving two individual student loan borrowers.
In both instances, the plaintiffs argued that the executive branch lacked the authority to expunge so much student debt.
The Supreme Court ruled that the two individual borrowers failed to make a convincing case that they would be injured by the loan forgiveness program, effectively ruling that they lacked legal standing to challenge the proposal of the Biden administration.
During oral arguments in February, the Biden administration asserted that a 2003 law known as the Higher Education Relief Opportunities for Students Act, or Heroes Act, gave it the authority to “waive or modify” loan provisions in order to protect borrowers affected by “a war or other military operation or national emergency.”
In its decision, the Supreme Court ruled that while the act permits Mr. Biden’s education secretary, Miguel Cardona, to “make modest adjustments and additions to existing provisions, but not transform them”
Justice John Roberts wrote that the changes made by the Biden administration “created a novel and fundamentally different” loan forgiveness program that “expanded forgiveness to nearly every borrower” in the United States.
He added that the administration’s use of the Heroes Act “barely resembles” previous instances of its application.
The Supreme Court’s decision was divided along ideological lines, with three liberal justices dissenting.
In her dissenting opinion, Justice Elena Kagan stated, “As a result, the court supplants Congress and the Executive Branch in determining national policy regarding student loan forgiveness.”
She wrote, “Congress authorized the forgiveness program, the [education secretary] implemented it, and the president would have been responsible for its success or failure.”
“However, the court ruled today that approximately 40 million Americans will not obtain the plan’s benefits because the assistance is too “significant.”
Previously, the White House estimated that nearly 90 percent of US student loan borrowers would have qualified for relief under the proposal.
This decision will affect a large number of individuals in this country. Outside of the Supreme Court, Ranen Miao, a 22-year-old recent graduate, told BBC News that those who are already historically marginalized will be disproportionately affected.
“Student loan borrowers are not the offspring of multimillionaires and billionaires. They are the offspring of working families,” Mr. Miao added, declining to disclose his student loan debt.
Clegg Ivey told CBS, the US partner of the BBC, that the Supreme Court had “made the right decision” and that he disagreed with the Biden administration’s approach to the matter.
“I have student loans and I would have certainly benefited,” he stated. “But if that is what we want, let’s speak with our representative. Congress… should perform its duties.”
Polling data indicates that support for the proposal to forgive student loans primarily followed political lines.
In a May survey conducted by the Marquette Law School, 31% of Republicans supported the proposal, compared to 69% of independents and 88% of Democrats.
Friday’s Supreme Court decision was immediately applauded by senior Republican legislators.
House Majority Leader Kevin McCarthy stated that the loan initiative is “illegal” and that Americans without student loans would no longer be required to pay for those with loans.
Approximately one-sixth of US adults with at least a post-secondary education owe money for student loans, totaling approximately 43 million individuals.
According to Federal Reserve data, the median student loan is approximately $17,000. Approximately 17% of creditors owe less than $10,000, while 7% owe more than $100,000.
Satra Taylor, a part-time student and Young Invincibles campaigner who owes approximately $103,000, is among those with the highest levels of debt. She told the BBC that she anticipates the number to increase as she pursues her doctoral studies.
“My family does not have a legacy of prosperity. “I had no choice but to take out student loans in order to put food on the table and pay the rent,” she said.
“I am deeply saddened by this decision, but I am optimistic that President Biden will ensure the cancellation of student debt.”
