Student loan borrowers stage a rally in front of the White House to celebrate President Joe Biden’s student debt relief plan, on Aug. 25, 2022 in Washington, D.C. The U.S. Supreme Court struck down the plan on June 30, 2023. Photo by Paul Morigi, Getty Images for We the 45m.

By Ariana Figueroa
Indiana Capital Chronicle

WASHINGTON — The U.S. Supreme Court on Friday, June 30, ruled that the Biden administration does not have the legal authority to enact a one-time student debt relief program, dealing a blow to the 40 million Americans who would have qualified.

Last year, the Biden Administration rolled out a debt forgiveness plan for borrowers with federal student loans that would be a one-time cancellation of up to $10,000.

Those student loan borrowers who had received Pell Grants — federal aid to help low-income students pay for higher education — could qualify for an additional $10,000 in forgiveness, a policy that was meant to provide equitable relief to Black borrowers.

In a 6-3 decision, Chief Justice John Roberts, writing for the conservative majority of the court, deemed that a loan servicer in Missouri, the Higher Education Loan Authority, known as MOHELA, would have its revenue threatened by the debt relief.

The case was filed by Republican attorneys general of Nebraska, Missouri, Arkansas, Kansas and South Carolina, along with Iowa Republican Gov. Kim Reynolds’ general counsel, and they argued the Biden administration overstepped its reach and that MOHELA would be harmed by a loss of profits from federal student loan debt relief.

The court majority agreed. “(T)he Secretary’s plan would cost MOHELA, a nonprofit government corporation created by Missouri to participate in the student loan market, an estimated $44 million a year in fees,” Roberts wrote.

“MOHELA is, by law and function, an instrumentality of Missouri: Labeled an ‘instrumentality’ by the State, it was created by the State, is supervised by the State, and serves a public function. The harm to MOHELA in the performance of its public function is necessarily a direct injury to Missouri itself.”

President Joe Biden said in a statement that “the fight is not over” to help borrowers.

“I believe that the Court’s decision to strike down our student debt relief plan is wrong,” Biden said in a statement, adding that his administration plans to announce more efforts to help borrowers.

“I will stop at nothing to find other ways to deliver relief to hard-working middle-class families,” he said. “My administration will continue to work to bring the promise of higher education to every American.”

Republicans celebrated the decision. Nebraska Attorney General Mike Hilgers and Missouri Attorney General Andrew Bailey held a Friday news conference.

Bailey said the case was about “protecting working Missouri families from getting saddled with Ivy League debt,” and about “basic fairness.”

All three liberal Justices, Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson, dissented. Kagan, writing for the dissenters, did not agree with the finding the states had standing.

The justices unanimously decided that a second case challenging the debt relief plan did not have legal standing. That case was brought by a two people with student loan debt who would either partially or entirely not qualify for the White House program. The case was backed by the conservative advocacy group the Job Creators Network Foundation.

Turbulent History For Student Debt Relief

The Biden administration’s student debt relief plan has not only been challenged in the courts by Republicans, but also in Congress. The House and the Senate voted to overturn the policy through the Congressional Review Act, but Biden vetoed the resolution.

More than 16 million borrowers had already been approved for relief, according to the Department of Education, before the agency was blocked from accepting more applicants following a nationwide injunction.

Repayments on federal student loans are set to resume Oct. 1, but interest accrual will begin starting Sept. 1, according to the Department of Education.

​​More than 43 million Americans have student loan debt, and the Federal Reserve estimates that the total U.S. student loan debt is more than $1.76 trillion.

A law passed in early June to address the nation’s debt ceiling codified that the White House would not be able to extend the pause on repayment for federal student loans unless approved by Congress.

For three years, there has been a pause on federal student loan repayment due to the coronavirus pandemic that was initially put in place by the Trump administration and extended by the Biden administration.

Youth Vote

The decision is likely to become an issue in the race for the presidency. Youth organizations that back student debt relief said they will use the ruling to rally support.

Cristina Tzintzún Ramirez, president of NextGen America, one of the largest youth voting organizations, said in a statement that “young voters will remember this come 2024.”

She added that, “heading into 2024, we will not forget the people who fight for us everyday and the people who would rather protect the pockets of shady billionaires.”

GOP presidential candidates, such as Nikki Haley, praised the decision as stopping executive overreach from the White House.

“A president cannot just wave his hand and eliminate loans for students he favors, while leaving out all those who worked hard to pay back their loans or made other career choices,” she said.

“The Supreme Court was right to throw out Joe Biden’s power grab.”

Another presidential candidate, Republican Sen. Tim Scott of South Carolina, released a video statement, arguing that there are other pathways to the “American Dream” that don’t require a college degree.

“We need more welders, carpenters and electricians,” he said. “These are the jobs that built America, and these are the jobs liberal elites can’t ship to China.”