The Supreme Court strikes down Biden’s student loan forgiveness plan

Though the Supreme Court ruled 6-3 on Friday to strike down President Joe Biden’s plan to forgive up to $20,000 in student loans, student debt relief might still be happening, albeit a little slower than with the original plan.

Speaking from the White House hours after the decision, the president announced his Plan B: to use the Higher Education Act, a 1965 law that governs most federal student loan programs, to provide the relief that the Court blocked.

The Supreme Court has struck down President Joe Biden’s student debt cancellation plan, dealing a blow to many Americans who hoped for further relief from repaying their more than $1.75 trillion in student loans.

Biden announced plans to create an alternate route to debt relief using the Higher Education Act Friday afternoon, a strategy he acknowledged would “take longer” (years longer than the original plan, even without legal challenges, some experts believe). In the meantime, the three-year payment freeze instituted during the pandemic will lift on August 30 and interest on those loans will accrue again. That could make it harder for many Americans to make progress in paying down their loans and send them deeper into debt.

Let’s not beat around the bush. The Supreme Court’s decision in Biden v. Nebraska, the one canceling President Joe Biden’s student loan forgiveness program, is complete and utter nonsense. It rewrites a federal law which explicitly authorizes the loan forgiveness program, and it relies on a fake legal doctrine known as “major questions” which has no basis in any law or any provision of the Constitution.

If you were counting on loan forgiveness — and Biden’s loan forgiveness program would have forgiven $10,000 worth of loans for most student borrowers, and $20,000 for Pell Grant recipients — you will not receive it because of a decision the Court handed down on Friday, in a 6-3 vote entirely along party lines.

More than three years after student loan repayments were paused due to the Covid-19 pandemic, borrowers will soon receive their first bill since early 2020. With the Supreme Court’s 6-3 ruling striking down Joe Biden’s debt relief plan — which would have canceled up to $20,000 in debt — and the debt ceiling bill preventing any future pauses on payments and interest without congressional approval, those with federal student loan debt will see no further relief: Payments will resume later this summer. Be prepared for when they do and to enroll in income-driven plans so you’re not faced with an unruly initial payment.

Payments remain paused until 60 days after June 30, 2023. Interest will begin accruing on September 1, and payments will begin in October. The US Department of Education will inform borrowers at least 21 days before payments restart. This notice will also include the payment amount and due date.

On the last day of February, the Supreme Court will consider the fate of President Joe Biden’s student loan forgiveness plan.

The legal issues are straightforward: A federal law known as the Heroes Act explicitly authorizes the program that Biden announced in the summer of 2022, as the Covid-19 pandemic persisted. Under that program, most borrowers who earned less than $125,000 a year during the pandemic will receive $10,000 in student loan forgiveness. Borrowers who received Pell Grants, a program that serves low-income students, may have up to $20,000 in debt forgiven.

I regret to inform you that we’re back to the will-it-happen-or-not phase of President Joe Biden’s plan to forgive student debt — but this time it’s not his fault. On Thursday, a Trump-appointed judge in Texas became the first judge in the country to declare that the program is invalid.

The program, which was announced this summer and which would provide some borrowers with as much as $20,000 in debt relief, was already under legal assault.

For many of the 43 million Americans with federal student loan debt, President Joe Biden’s plan to forgive up to $20,000 in debt is unequivocally good news.

But in the days since the policy was announced, it has also led to pushback, debate, and controversy — arguments that are likely to be studied for months and adjudicated by researchers for years, if not decades.

President Joe Biden announced his administration’s long-awaited student loan forgiveness plan Wednesday, saying it will forgive $10,000 in student loans for borrowers who earned less than $125,000 during the pandemic. People who received Pell Grants, grants to low-income students, while they were enrolled in college will be eligible to have $20,000 in debt forgiven.

The move will be enough to wipe out some student debt entirely: 15 million of the 43 million people with federal loans owe less than $10,000, and those borrowers are typically the most likely to fail to pay back their loans. In all, the plan will eliminate student debt for about 20 million people, according to an analysis provided by the Education Department, and decrease monthly payments by an average of $250 for borrowers with a remaining balance who are on standard 10-year payment plans.

Pieces like this almost always start with someone’s student debt story. Here’s a person who wanted to go to college — they’d always dreamed of a career that required it, or they had just internalized the idea that college was the only route to success. Their parents hadn’t saved enough to cover the costs, but when they filled out their FAFSA, a solution to their problems presented itself: an abundance of student loans, no questions asked. It was a no-brainer! College was the way to a better future, and student loans were what you needed for college.

That’s the first act of the story. In the second act, the student has graduated from college. Maybe they struggled to find a job, and convinced themselves that the real route was grad school. They took out more loans for law school, or med school, or architecture school; maybe they figured out they wanted to teach, and needed to get a master’s degree to do so. Someone might have told them about the Public Service Loan Forgiveness program: If they spent a decade, post-graduation, working in a field that qualified as public service and made regular, income-based repayments on their loans, the rest of the balance would be forgiven.