Washington: The conservative majority of the court ruled, 6-3, that Biden's attempt to cancel about $400 billion in student debt constituted an unlawful exercise of executive authority.
President Joe Biden's proposal to forgive up to $20,000 of student debt for tens of millions of Americans was rejected by the Supreme Court on Friday, derailing the president's top domestic priority as he runs for reelection.
The conservative majority on the court decided, 6-3, that Biden's attempt to cancel about $400 billion in student debt constituted an unlawful exercise of executive authority.
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The decision immediately invalidates debt relief plans that the Education Department had approved for 16 million borrowers last autumn and millions of other borrowers who still have applications pending.
Additionally, it poses new political difficulties for the White House, which will come under pressure from progressives to fulfil Biden's promise of loan forgiveness despite the setback in the legal process.
Writing on behalf of all of his Republican-appointed colleagues, Chief Justice John Roberts rejected the Biden administration's claim that it could implement widespread debt forgiveness by utilising emergency "waiver" powers related to the Covid-19 pandemic.
According to Roberts, the HEROES Act "allows the Secretary to 'waive or modify' existing statutory or regulatory provisions" but not to "rewrite" the federal student loan law "from the ground up."
According to Roberts, Biden's proposal "the Executive seizing the power of the Legislature" and "far beyond the logical bounds" of the pandemic-related emergency measure.
The "economic and political significance" of the move, according to Roberts, is "staggering by any measure." The Biden administration's "comprehensive debt cancellation plan cannot fairly be called a waiver — it not only nullifies existing provisions, but augments and expands them dramatically," he wrote.
In her dissent, Justice Elena Kagan portrayed the court's action as a troubling instance of judicial overreach and argued that it was consistent with the conservative majority of the court interfering in matters that should be handled by the political branches.
"The Court declines to recognise the HEROES Act's clear language. It refuses to respect the Congress's decision to grant the secretary of education broad emergency powers, Kagan wrote. It prevents the political system from functioning normally and its accountability mechanisms. Of all things, it makes itself the authority on federal student loan policy. Then, perhaps, it questions why it has only exacerbated the "sharp debates" in the nation.
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As she read aloud portions of her dissent from the bench on Friday, Kagan stated that the court's ruling leaves the education secretary "powerless." A member of the court's liberal bloc chose to voice their disagreement orally for the third time in two days, a rare action that denotes particular vehemence. Justice Sonia Sotomayor read parts of her dissent earlier on Friday in a case that weakened protections for LGBTQ people, and earlier on Thursday in a case that invalidated affirmative action in higher education.
After the terrorist attacks of September 11, 2001, Congress passed the HEROES Act, which gave the Education Department special authority to alter the standard regulations governing federal student loans in the event of a national emergency.
According to the law, the secretary of education may "waive or modify any statutory or regulatory provision" pertaining to federal student loans "as may be necessary to ensure that" borrowers "are not placed in a worse position financially" as a result of a national emergency.
In order to prevent a spike in defaults when it starts collecting payments again after they were paused during the pandemic for more than three years, the Biden administration argued that it was necessary to cancel student debt for the majority of borrowers.
On Thursday, the justices issued decisions in two cases that contested the debt relief plan.
A group of Republican state solicitors general, led by Nebraska and Missouri, filed the first. A second lawsuit was filed by the Job Creators Network Foundation, a right-wing organisation, on behalf of two Texas residents who had taken out federal loans but were either completely or partially disqualified from the debt relief programme.
Whether the Republican-led states and those two borrowers had shown the kind of concrete injury necessary to have their complaints heard in federal court was a key question in the cases. The states argued that they had standing because debt relief would result in a decrease in the number of borrower accounts that could be serviced by the Missouri Higher Education Loan Authority, or MOHELA, a hired loan servicer for the Education Department.
Based on Missouri's claims, the conservative majority determined that the states had legal grounds to file the lawsuit. Because the loan servicer is a "public instrumentality" of the state, Roberts claimed that the student debt relief program's "harm to MOHELA is also a harm to Missouri".
In contrast, the court on Friday ruled unanimously that the individual borrowers lacked legal standing to contest the programme in an opinion written by Justice Samuel Alito. The two Texas loan borrowers claimed that their rights to publicly comment on Biden's student debt relief proposal and to argue that the relief should be extended to them had been violated.
Conservatives hailed the court's ruling as a victory for controlling a student loan forgiveness programme they had criticised as an illegal scheme that was unfair to Americans without student debt and too expensive for taxpayers.
Sen. Bill Cassidy of Louisiana, the ranking Republican on the Senate education committee, who has led the opposition to the plan in the Senate, called the decision an obvious but welcome one. President Biden's student loan programme unfairly shifts the burden from borrowers who voluntarily took out loans to those who chose not to attend college or who had already paid off their loans in full.
Progressives are now urging the administration to concentrate on creating a different strategy for cancelling student loans that is based on a different piece of legislation, such as the secretary of education's authority to compromise and settle debts under the Higher Education Act.
Sen. Elizabeth Warren (D-Mass.) said in a statement following the decision that "this fight is not over." The President must make use of the additional tools at his disposal to cancel student loan debt.
Officials in the Biden administration had repeatedly stated for months that they were certain that their initial debt relief programme was lawful and that they weren't putting together a backup debt cancellation strategy. But in light of the Supreme Court's rebuke, the White House must now choose how aggressively to pursue alternatives.
They are currently facing a deadline this autumn when student loan payments, which have been postponed since the pandemic started in March 2020, are scheduled to start up again. Progressives have demanded that the Education Department hold off on taking payments until student loan forgiveness has been implemented.
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Biden's now-defunct proposal called for waiving up to $20,000 of debt for borrowers who had received Pell Grants or up to $10,000 of debt per borrower.
To be eligible for the programme, borrowers had to have an annual income of no more than $125,000 for an individual or $250,000 for a couple in 2020 or 2021. Only federally held student loans taken out prior to July 1, 2022 were covered by it.
Nearly 25 million Americans applied for the programme during the roughly four weeks that the Education Department accepted applications last autumn.
The programme abruptly came to an end due to legal challenges after lower court judges last year invalidated the scheme and issued orders preventing it.
Even before federal appeals courts had made decisions on the merits of either case, the cases were swiftly brought before the Supreme Court. In February, the court heard oral arguments in which the majority of the justices voiced their scepticism regarding the programme.
