Top court blocks Biden plan on student debt

The US Supreme Court handed President Joe Biden a painful defeat yesterday, blocking his plan to cancel $430bn in student loan debt – a move that had been intended to benefit up to 43mn Americans and fulfil a campaign promise.
The justices ruled against Biden in a 6-3 decision favouring six conservative-leaning states that objected to the policy.
The six Republican-led states that sued said that the HEROES 2003 act, which aimed to help former students who joined the military after the September 11, 2001 attacks, does not authorise Biden’s loan cancellation.
“We agree,” Chief Justice John Roberts wrote in the majority opinion. “The question here is not whether something should be done; it is who has the authority to do it.”
“Among Congress’s most important authorities is its control of the purse,” wrote Justice Neil Gorsuch.
The court’s action dealt a blow to the 26mn US borrowers who applied for relief after Biden announced the plan in August 2022 and represented a political setback for the Democratic president.
Chief Justice John Roberts, joined by the court’s five other conservative members, wrote the ruling. The court’s three liberals dissented.
“This fight is not over,” Biden said after a ruling he called disappointing and wrong, promising an announcement later.
Roberts derided the Biden administration’s argument that the loan forgiveness programme was merely a modification of an existing programme and noted that such broad action would require clear congressional approval.
“The secretary’s plan has ‘modified’ the cited provisions only in the same sense that the French Revolution ‘modified’ the status of the French nobility – it has abolished them and supplanted them with a new regime entirely,” Roberts wrote, referring to US Secretary of Education Miguel Cardona.
“From a few narrowly delineated situations specified by Congress, the secretary has expanded forgiveness to nearly every borrower in the country,” Roberts said.
The court’s ruling invoked what is called the “major questions” doctrine, a muscular judicial approach that gives judges broad discretion to invalidate executive agency actions of “vast economic and political significance” unless Congress clearly authorised them in legislation.
Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina challenged Biden’s debt relief.
Two individual borrowers had also opposed the plan’s eligibility requirements but the justices dismissed their challenge yesterday due to a lack of legal standing.
The court acted on its final day of rulings in its term that began in October.
Twenty-six million US borrowers applied for relief between when Biden announced the plan in August 2022 until last November, when lower courts blocked the plan.
“Nearly 90% of the relief from our plan would have gone to borrowers making less than $75,000 a year, and none of it would have gone to people making more than $125,000,” Biden said in a statement.
“It would have been life-changing for millions of Americans and their families. And it would have been good for economic growth, both in the short and long term,” he added.
Biden’s plan fulfilled his 2020 campaign promise to cancel a portion of $1.6tn in federal student loan debt but was criticised by Republicans who called it an overreach of his authority and an unfair benefit to college-educated borrowers while other borrowers received no such relief.
Under the plan, the US government would forgive up to $10,000 in federal student debt for Americans making under $125,000 who obtained loans to pay for college and other post-secondary education and $20,000 for recipients of Pell grants to students from lower-income families.
Both Biden and his Republican predecessor Donald Trump relied upon the HEROES Act beginning in 2020 to repeatedly pause student loan payments and halt interest from accruing to alleviate financial strain on student loan borrowers during the coronavirus (Covid-19) pandemic.
Biden, who is seeking re-election next year, also criticised Republican elected officials.
“They had no problem with billions in pandemic-related loans to businesses – including hundreds of thousands and in some cases millions of dollars for their own businesses,” Biden said. “And those loans were forgiven. But when it came to providing relief to millions of hard-working Americans, they did everything in their power to stop it.”
Some 53% of Americans said they support Biden’s debt relief, with 45% opposed, according to a Reuters/Ipsos poll from March.
The ruling came a day after the Supreme Court effectively prohibited affirmative action policies long used by US colleges and universities to raise the number of black, Hispanic and other underrepresented minority students.
Biden said on Thursday that the court, with its conservative majority, was an institution out of touch with the country’s basic values.
During February arguments in the loans case, Biden’s administration said the plan was authorised under a 2003 federal law called the Higher Education Relief Opportunities for Students Act, or HEROES Act, which empowers the US education secretary to “waive or modify” student financial assistance during war or national emergencies.
The court’s conservative justices had previously used the “major questions” doctrine to invalidate major Biden policies deemed lacking clear congressional authorisation.
They did so when they blocked the US Centres for Disease Control and Prevention (CDC) from extending eviction protections for cash-strapped residential renters, stymied Biden’s Covid-19 vaccination-or-testing mandate for large businesses, and restricted the Environmental Protection Agency (EPA)’s power to regulate carbon emissions from power plants.
The major questions doctrine arises from an approach favoured by many conservatives and business groups to rein in what they view as excesses of the “administrative state”.
They object to what they consider accumulated power by the executive branch without proper checks by the courts and Congress.
Liberal Justice Elena Kagan, in a dissent that was joined by her two fellow liberals, derided the major questions doctrine as “made-up”.
“Small wonder the majority invokes the doctrine,” Kagan wrote. “The majority’s ‘normal’ statutory interpretation cannot sustain its decision. The statute, read as written, gives the Secretary broad authority to relieve a national emergency’s effect on borrowers’ ability to repay their student loans.”