Supreme Court Votes 6-3 To Strike Down President Biden’s Student Loan Forgiveness Program

Impact of decision felt by many Californians

In a 6-3 decision on Friday, the United States Supreme Court ruled that the Biden Administration does not have the legal authority to forgive student loans under the HEROES Act. This ruling officially ends the plan by President Joe Biden to forgive millions of student loans totaling more than $400 billion.

Only Congress has the authority to forgive federal student loans under the HEROES Act the court ruled in the Biden v. Nebraska ruling. The HEROES Act is a 2002 law that grants relief or waivers for those with federal loans with a connection to a war or other military operation, or national emergency.

While the Trump administration legally only temporarily paused student loan payments in 2020 due to the COVID-19 pandemic, then subsequently extended under Biden through early 2022, Biden’s larger forgiveness plan, including forgiving $20,000 in loans for each student, was immediately challenged.

Several states brought the matter to court, leading to the decision by the Supreme Court on Friday.

In the Majority opinion, Chief Justice John Roberts said:

“The HEROES Act allows the secretary to waive or modify existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, but does not allow the secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal.”

Three justices, Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson, dissented, with Kagan writing:

“In every respect, the court today exceeds its proper, limited role in our nation’s governance. The result here is that the court substitutes itself for Congress and the executive branch in making national policy about student-loan forgiveness.”

Biden v. Nebraska ruling

With the student loan forgiveness program now effectively dead, hundreds of thousands of current and former students holding federal loans now face having to fully pay them back in full. Many student loan experts note that, for Californians, there could be some financial hardships ahead.

“When it came to student loan forgiveness, the biggest thing I heard from those who got the loans were that they thought that they should only pay the principle and the interest, because they didn’t think that the government should profit off of loans,” explained student loan advisor Ana Lucia Lopez to the Globe on Friday. “Well, first off, they kind of don’t because they lose money at it and second, they signed the paper saying they would, so they are held accountable. But this is what the decision just did for many in California. For many, they had gotten used to having the temporary forgiveness for years or going in through the loophole of not having to pay back loans by being in college at the time, and then taking a few classes at the local community college for a couple hundred bucks to not have to pay off loans for another semester.”

“This ruling screws all that up. It was called a relief program for a reason. And because so many in California have been scraping by month to month in the last few years, not having a loan payment each month of $300 or $400 or more was big for them staying afloat. The loan forgiveness that Biden was pushing would have either greatly extended that or just eliminated their loan outright. In California it was critical to many because of the cost of living, high rent costs, and other associated costs.”

“So, one one hand, you feel for all these people in their 20s and 30s and beyond now facing a much more uncertain future. But on the other, they were the ones who signed their name on the agreement, and that action has a consequence. Between this and the affirmative action ruling yesterday, things just greatly changed for those looking at college overnight. And for a diverse state like California that is also the biggest holder of student loan debt in the country, with over 9%, it’s almost like a whole new world to navigate all the sudden. It’s now based more on merit, and you can’t rely on having your loans be forgiven after college now.”

Click here to read the full article in the California Globe

Kamala Harris urges debt forgiveness for Corinthian students

As reported by the Sacramento Bee:

Joining a group of student loan recipients who have refused to repay tens of thousands in debt they racked up at schools owned by Corinthian Colleges, Attorney General Kamala Harris is calling upon the federal government to forgive loan debt for borrowers who attended the troubled for-profit chain.

In a letter to U.S. Secretary of Education Arne Duncan released Thursday, Harris and the attorneys general of eight other states urged the Department of Education to “immediately relieve borrowers of the obligation to repay federal student loans that were incurred as a result of violations of state law by Corinthian Colleges, Inc.”

“Through their predatory practices, these unscrupulous for-profit schools have co-opted a public loan program intended to increase access to higher education and left hundreds of thousands of students in financial ruin,” the letter states. …

Click here to read the full article