Supreme Court: Student debt plan was executive overreach

Borrowers waiting to find out if the government would forgive their student loans have their answer: The Supreme Court says the White House doesn’t have the power to cancel the debts, and Congress doesn’t have the votes.

In a 6-3 decision issued Friday morning, the Supreme Court struck down the Biden administration's plan to forgive up to $20,000 in debt for students with federal loans—an estimated total of $430 billion over a decade.

The Department of Education unveiled the plan in August and began taking applications from borrowers soon after. Opponents of the plan decried it as unfair and irresponsible. Sen. Ted Cruz, R-Texas, called it “morally bankrupt” because it would transfer the debt from student loan recipients to taxpayers, many of whom did not attend college.

Federal courts put the program on hold in November 2022.

Then at the beginning of June, the plan encountered opposition in Congress when the Senate voted 52-46 to nullify it. Sens. Joe Manchin, D-W.Va., and Kyrsten Sinema, I-Ariz., joined Republicans in voting for the resolution. Forgiving student debt, supporters contended, was a step too far for a regulatory agency of the executive branch.

President Joe Biden promptly vetoed the measure.

“At least 16 million of these borrowers could have received debt relief already … It is a shame for working families across our country that lawmakers continue to pursue this unprecedented attempt to deny critical relief to millions of constituents,” Biden said in a statement.

The Supreme Court’s decision, however, isn’t something Biden can overcome with a veto.

Six states—Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina—sued the Department of Education last year, using the same reasoning as the Senate: They contended the plan was an unfair misapplication of executive power. In their filing, the plaintiffs accused the Biden administration of trying to circumvent the legislative process entirely.

“Nothing about loan cancellation is lawful or appropriate. In an end-run around Congress, the administration threatens to enact profound and transformational policy that will have untold economic impacts. The administration’s lawless action should be stopped immediately,” the filing read.

Writing for the majority, Chief Justice John Roberts concurred with their reasoning. Specifically, the court found that the Biden Administration could not find the power it was looking for within the context of the HEROES Act—a 2003 law that allows the education department to waive or modify federal financial assistance in the event of a national emergency.

“We hold today that the Act allows the Secretary [of Education] 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.

Forgiving debt hasn’t been the political slam dunk many Democrats thought it would be. But for a president who was seemingly lukewarm to the idea originally, the Supreme Court’s decision may serve to get the policy off his plate with minimal political fallout.

On the campaign trail in 2019, then-candidate Joe Biden wasn’t as enthusiastic about student loan debt as some of his competition. Sens. Bernie Sanders and Elizabeth Warren both highlighted student debt as an area where a president should take aggressive action.

“We are going to cancel all student debt in this country, and we’re going to do that by imposing a tax on Wall Street speculation.” Sanders said during a debate on ABC News in 2019.

Warren similarly proposed eliminating $50,000 in student loans for households making under $100,000.

In a debate in June 2019, Biden proposed policy ideas like providing free community college and freezing student payments for those earning under a certain dollar amount annually. But his pledge to forgive debt wouldn’t come until after he had secured the Democratic nomination.

“I made a commitment to provide student debt relief,” President Joe Biden told audiences as he explained his plan in October 2022. “This means people can finally crawl out from under that mountain of debt … when this happens the whole economy is better off.”

Whether those plans ever come to fruition, Biden can now enter his bid for reelection saying he at least tried to make those promises a reality. The president would need a steeply divided Congress to act to get the plan back off the ground.