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The Supreme Court ruled President Joe Biden can’t wipe away or reduce student loans held by millions of Americans.
In a 6-3 decision, the high court’s conservative justices agreed with the suing states that the HEROES Act does not authorize Biden’s debt forgiveness plan.
At issue was whether the administration had authority to broadly cancel federal student loans because of the COVID-19 emergency.
Loan payments that have been on hold since the start of the coronavirus pandemic three years ago are supposed to resume no later than this summer. Without the loan relief promised by the Biden plan, the administration’s top Supreme Court lawyer said, “delinquencies and defaults will surge.”
The debt forgiveness plan announced in August 2022 would cancel $10,000 in federal student loan debt for those making less than $125,000 or households with less than $250,000 in income per year. Pell Grant recipients, who typically demonstrate more financial need, would get an additional $10,000 in debt forgiven.
College students qualify if their loans were disbursed before July 1. The plan makes 43 million borrowers eligible for some debt forgiveness, with 20 million who could have their debt erased entirely, according to the Biden administration.
The rally comes as the high court’s justices hear challenges to President Biden’s student loan forgiveness plan.
The White House says 26 million people have applied for debt relief, and 16 million people had already had their relief approved. The Congressional Budget Office has said the program will cost about $400 billion over the next three decades.
To cancel student loan debt, the Biden administration relied on the Higher Education Relief Opportunities for Students Act, commonly known as the HEROES Act. Originally enacted after the Sept. 11, 2001, terror attack, the law was initially intended to keep service members from being worse off financially while they fought in wars in Afghanistan and Iraq. Now extended, it allows the secretary of education to waive or modify the terms of federal student loans as necessary in connection with a national emergency.
The administration cited the national emergency created by the pandemic as authority for the debt relief program under a law commonly known as the HEROES Act.
The Biden administration has said that the end to the national emergency doesn’t change the legal argument for student loan debt cancellation because the pandemic affected millions of student borrowers who might have fallen behind on their loans during the emergency.
In addition to the debate over the authority to forgive student debt, the court was confronting whether the states have the legal right, or standing, to sue. Parties generally have to show that they would suffer financial harm in order to have standing in cases such as this.
When six Republican-led states sued the administration, a lower court initially dismissed their lawsuit, saying the states could not challenge the program because they weren’t harmed by it. But a panel of three federal appeals court judges on the U.S. Court of Appeals for the 8th Circuit — all of them appointed by Republican presidents — put the program on hold during an appeal.
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