Supreme Court Strikes Down Biden’s Student-Loan Debt Forgiveness Plan
Despite concerns over the plan’s legal foundation, LAW’s Jed Shugerman calls SCOTUS decision “disappointing”
The Supreme Court ruled on Friday that President Joe Biden overstepped his authority in creation of a student-loan forgiveness plan, delivering a devastating blow to a proposal that would have canceled more than $400 billion in student loans for millions of borrowers.
The 6-3 decision, split along the court’s ideological line, found that the US Department of Education cannot rely on the HEROES Act (Higher Education Relief Opportunities for Students) to waive student debt.
That legislation, which passed in 2003 in the wake of 9/11, allows the Secretary of Education to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs…as the Secretary deems necessary in connection with a war or other military operation or national emergency.”
In 2020, with the COVID-19 pandemic as the context for a national emergency, the HEROES Act was the foundation of the administration’s loan-forgiveness regime. The Biden administration argued that the pandemic—and the national emergency it wrought—gave it the authority to waive or modify loan terms for debt cancellation.
In his majority opinion, Chief Justice John G. Roberts derided this argument, comparing it to the way that “the French Revolution ‘modified’ the status of the French nobility,” he wrote, quoting a previous court decision.
In remarks from the White House after the ruling, Biden criticized the court’s decision, saying that he thought it “misinterpreted the Constitution.”
Jed Shugerman, a visiting professor at the BU School of Law, describes the decision as disappointing.
Shugerman had legitimate concerns about the legal and political strategies the Biden administration used to build its debt forgiveness plan, but says the court went far beyond these legal arguments to deliver a decision that’s broader, and more ideological, in nature.
“The court did exactly what I was worried about,” says Shugerman, who is a Fordham University professor of law. “There were specific problems with what the Biden administration had done with using national emergencies to pass laws, and instead of the Roberts court focusing on that more specific problem, they made this a broad attack on administrative policymaking.”
In short, he says, “There was an opportunity for them to be careful. And they were instead ideological.”
Biden’s plan would have forgiven up to $10,000 in federal student loans for borrowers who make less than $125,000 a year, or less than $250,000 a year for families. For people who received Pell Grants—federal aid that’s awarded to undergraduate students who display exceptional financial need—the federal government would have canceled up to $20,000 per borrower.
The court considered two separate cases this term, both concerning the Biden administration’s student-loan forgiveness plan. It struck down the plan in a case brought by a group of Republican-controlled states known as Biden v. Nebraska. In a separate case, brought by two individual students—Department of Education v. Brown—the court ruled that the students didn’t have standing to challenge the program. That ruling is irrelevant, however, given the outcome of the other case.
Shugerman says he was surprised that all six of the court’s conservative justices joined Roberts’ majority opinion. During oral arguments for the Nebraska case, Justice Amy Coney Barrett seemed to express deep skepticism that any of the six states challenging the debt forgiveness plan had standing.
That the justices closed ranks, he says, “shows that the six conservative justices are idealogues.”
In a scathing dissent, Justice Elena Kagan (joined by the court’s two other liberal justices), accuses the majority of overstepping the high court’s “proper, limited role in our nation’s jurisprudence.”
Approximately 26 million borrowers had applied to have some of their student loan debt eliminated and more than half of those applications had already been approved, but had not yet been forgiven because of the legal challenges brought before the Supreme Court.
BU students reacted with disappointment and frustration to the news on Friday.
Emily Pauls (COM’22) says she has more than $20,000 in student-loan debt and had been looking forward to the prospect of some relief. “I think it’s very unfortunate. There’s many of us who were really relying on this debt relief for the future of our professional careers. It’s a grim future for a lot of us now.”
In his remarks Friday, Biden touted the modest changes his administration has made to certain specific student-loan debt relief programs, and blamed his Republican colleagues in Congress for “snatching money out of the hands” of student-loan borrowers.
He also said that his administration is working on a two-pronged approach following the Supreme Court’s ruling. First, his administration is pursuing a new plan to relieve student-loan debt, grounded in a different law, the Higher Education Act of 1965, a route Shugerman suggested in a February interview with BU Today. Second, Biden said the Department of Education wouldn’t refer borrowers who can’t pay back their loans to credit agencies for another year, to give people time “to get back up and running.”
Moving forward, Shugerman says, the Biden administration’s approach will mean engaging in a lengthy political and judicial process that would almost certainly extend beyond Biden’s remaining year and a half in office.
“Frankly, the easiest part will be winning the 2024 election,” he says. “That’s saying something.”