Student loan: US Supreme Court Overturns Biden’s Plans To Forgive debt 

The Supreme Court on Friday overturned President Biden’s far-reaching plan to forgive student loan debt, a ruling that deals a blow to more than 40 million Americans who were set to benefit from the nearly half-trillion-dollar program.

Biden announced plans last August to eliminate up to $20,000 of federal student loan debt for borrowers earning up to $125,000 annually, or up to $250,000 for married couples. The administration said the plan would clear the balances of 20 million borrowers.

But a series of lawsuits challenged the legality of the program and brought it to a halt, leading the administration to petition the Supreme Court to intervene. After hearing oral arguments in February, the court ruled this week that the education secretary doesn’t have the authority to enact sweeping debt reduction without congressional approval.

Here are some things to know about the loan and court ruling:

* What exactly did the Supreme Court rule?

* What happens now with the program?

* When will federal student loan payments resume?

* What did the dissent say?

* What exactly did the Supreme Court rule?

In a 6-3 decision written by Chief Justice John G. Roberts Jr., the high court ruled that the Biden administration overstepped by enacting a policy with broad economic significance where the law permitted only minor “modifications.”

The administration said it had the authority to cancel debt under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, a law that lets the secretary of education “alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies.”

Key details on Biden’s student loan forgiveness

The Supreme Court rejected President Biden’s student loan forgiveness plan in the latest blow to the ambitious program.

After more than three years, the student loan payment pause will end, and payments will resume in October.

Last year, the debt-relief plan drew legal challenges after it was unveiled, and it had been on hold since last November.

But the majority argued that the statute was never meant to be used to implement policy with such a “staggering” economic impact.

The administration had argued that Republican-led states lacked the legal standing to challenge the initiative.

But the U.S. Court of Appeals for the 8th Circuit had ruled that the Missouri Higher Education Loan Authority (MOHELA), a quasi-independent entity, could suffer losses from the debt relief program that would ultimately hurt Missouri, one of the challenger states — and, as such, it suffered a specific injury that could be remedied by relief from a federal court. In his decision, Roberts agreed, saying the administration’s plan harms MOHELA in the performance of its public function and therefore harmed the state of Missouri.

The Biden administration was successful in arguing that two individuals in a separate case from Texas lacked standing to strike down the debt relief program. A lower court had ruled in favor of the two borrowers, Myra Brown and Alexander Taylor. Taylor doesn’t qualify for $20,000 of forgiveness, while Brown is ineligible altogether.

What happens now with the program?

Biden said he is not done fighting and will “stop at nothing to find other ways to deliver relief to hard-working middle-class families.”

Within hours of the court’s ruling, the president announced plans to push his debt relief policy through the regulatory rulemaking process. Instead of the 2003 law, Biden will use an authority in the 1965 Higher Education Act to achieve widespread debt cancellation. That law, he said, allows the education secretary to “compromise, waive or release loans under certain circumstances.”

“This new path is legally sound,” Biden said. “It’s going to take longer, but, in my view, it’s the best path that remains to providing for as many borrowers as possible with debt relief.”

The Education Department on Friday published a notice to initiate the rulemaking process and will hold a virtual public hearing on July 18.

Biden also said his administration will provide student loan borrowers an “on-ramp” — a 12-month grace period for missed payments to ease more than 40 million people back into the system after a three-year reprieve.

Liberal lawmakers urge White House to prepare backup plan on student debt

When will federal student loan payments resume?

The Education Department has said interest will begin incurring on federal student loans in September, with payments due in October.

Borrowers with federal student loans have not been required to make payments because of a freeze implemented during the coronavirus pandemic. The Education Department had said payments would resume 60 days after the court handed down a decision, and legislation to suspend the debt ceiling codified that plan into law.

Student loan payments will resume in October. Here’s how to prepare.

The Education Department is planning to give borrowers a grace period for missed payments. Three people familiar with the department’s plans, who spoke on the condition of anonymity because they were not authorized to speak publicly, said the borrowers will be given a 90-day reprieve that could be extended by another three months. The department declined to discuss the plan but said it is working to ensure borrowers are eased back into repayment of their student loans.

How does student debt break down?

Most student debt is held in large loans, but most borrowers have small loans.

About 13% of federal student debt is held in loans of $20K or less, but 53% of borrowers owe less than $20K

33% of borrowers have $10K or less left on their loans.

What did the dissent say?

“The result here is that the Court substitutes itself for Congress and the Executive Branch in making national policy about student-loan forgiveness,” Justice Elena Kagan wrote in a dissent signed by the court’s liberal members. “Congress authorized the forgiveness plan (among many other actions); the Secretary put it in place; and the President would have been accountable for its success or failure. But this Court today decides that some 40 million Americans will not receive the benefits the plan provides, because (so says the Court) that assistance is too ‘significant.’”

“Congress is of course a democratic institution; it responds, even if imperfectly, to the preferences of American voters. And agency officials, though not themselves elected, serve a President with the broadest of all political constituencies. But this Court? It is, by design, as detached as possible from the body politic. That is why the Court is supposed to stick to its business — to decide only cases and controversies … and to stay away from making this Nation’s policy about subjects like student-loan relief. The policy judgments, under our separation of powers, are supposed to come from Congress and the President. But they don’t when the Court refuses to respect the full scope of the delegations that Congress makes to the Executive Branch. When that happens, the Court becomes the arbiter — indeed, the maker — of national policy. … That is no proper role for a court. And it is a danger to a democratic order.”

What’s next for student loan debt relief?

In the latest blow, the Supreme Court rejected President Biden’s student loan forgiveness plan. Read the full text of the student loan relief decision.

When do repayments resume?

After more than three years, the student loan payment pause will end, and payments will resume in October. Here’s what to focus on as student loan payments resume.

How did we get here?

The controversial debt-relief plan drew legal challenges shortly after it was unveiled last August, and it has been put on hold since November after rulings in two cases. The House and Senate passed a GOP-lead effort to strike down student loan forgiveness, but Biden vetoed the measure in June.

Reported by Washington Post