The Supreme Court of the United States blocked the Biden administration’s student loan forgiveness program on June 30, 2023. The National Association of Scholars (NAS) is pleased with the Court’s decision. The debt relief program would have been an unfair wealth transfer that would have cost Americans more than $400 billion dollars. Furthermore, it would have exacerbated the disease of rising college costs.
In August 2022, the Biden administration proposed eliminating $10,000 in student loan debt for borrowers earning under $125,000 and up to $20,000 for Pell Grant recipients. President Biden bypassed Congress to do this. He used the HEROES Act, a 9/11-era law which allows the Education Secretary to waive or modify student loan payments during national emergencies. President Biden cited the coronavirus pandemic as a “national emergency” to justify such a jubilee.
The Court disagreed. In Biden v. Nebraska, Chief Justice Roberts wrote for the majority:
“The Secretary asserts that the HEROES Act grants him the authority to cancel $430 billion of student loan principal. It does not. 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.”
In order for the justices to reach this decision, plaintiffs had to prove that they were harmed by the loan forgiveness program—in other words, they needed to prove standing. This proved to be a challenge: many lawsuits against Biden’s program failed to reach the Supreme Court, and one of the two cases considered by the justices was unanimously thrown out due to lack of standing. In Biden v. Nebraska, out of the six states that sued, the justices formally determined that only Missouri had standing due to harm to its state loan servicing agency the Missouri Higher Education Loan Authority (MOHELA).
We stand with the justices in their decision to curb this grossly unconstitutional executive overreach by the Biden administration. But this is not the end of calls for debt forgiveness.
Shortly after the Court issued its decision, the Biden administration announced it would pursue alternative options to forgive student loans. The administration is already looking to make loan forgiveness a permanent part of the student loan system by changing Income Driven Repayment (IDR) programs, a safety net for economically non-viable educational programs.
A win is a win. But the work must go on. The NAS will continue to advocate for sound economic policies to reduce higher education costs and reform the system as it works.