In a significant setback for President Joe Biden’s administration, the Supreme Court, in a 6-3 decision on Friday, stymied the President’s plan to forgive up to $20,000 in student loan debt for millions of borrowers.
The Decision’s Grounds
In its ruling, the Court stated that the Biden administration lacked the necessary authority to forgive student loan debt under the provisions of the Higher Education Act of 1965. This act empowers the Secretary of Education to waive or modify the conditions of federal student loans. However, the Supreme Court determined that such power did not extend to blanket student loan forgiveness.
This verdict signifies a significant blow to Biden, who had positioned student loan forgiveness as a principal promise during his campaign. The administration had argued that the unprecedented conditions brought about by the COVID-19 pandemic constituted a national emergency that justified extensive student loan forgiveness. The court, however, ruled that the pandemic did not meet the definition of a national emergency as outlined in the Higher Education Act.
Impact and Reactions
This decision also translates to a victory for Republican-led states, which had previously challenged the Biden administration’s student loan forgiveness plan. These states maintained that the plan constituted an overreach of executive power and would unfairly advantage borrowers who had already managed to repay their student loans.
It’s important to note that the Supreme Court’s decision doesn’t entirely eliminate the possibility of student loan forgiveness. There remains potential for Congress to pass legislation forgiving student loan debt. However, given the current political climate, the chances of passing such a law are remote.
Remaining Options for Borrowers
Meanwhile, borrowers burdened with student loan debt might still find some relief through income-driven repayment (IDR) plans. IDR plans calculate borrowers’ monthly payments as a percentage, usually between 10% to 20%, of their discretionary income. After 20 or 25 years of regular payments under an IDR plan, the remaining debt is forgiven.
While the Supreme Court’s decision is a disappointment for borrowers anticipating extensive student loan forgiveness, it’s critical to remember that there are still viable options available for those wrestling with their debt. Though the court’s ruling has complicated the journey toward debt forgiveness, it has by no means halted it entirely. Borrowers are advised to explore all available options and financial strategies, such as IDR plans, to manage their student loan debt effectively.
