The Supreme Court has blocked President Joe Biden’s student loan forgiveness plan for the 40 million borrowers who could have qualified. The justices ruled that two individual borrowers who challenged the program lacked standing to do so. The court also found that the Biden administration overstepped its authority in the HEROES Act, which gives the Education Secretary broad powers to give emergency relief to students. The 6-3 decision is a political setback for Biden, who made tackling student debt a major campaign pledge. The debt-forgiveness program would have canceled federal loans for millions of middle-class Americans. It would have ended the three-year pause in student loan payments put in place during the pandemic and prevented interest from accruing on those loans.
At a February oral argument, conservative justices were skeptical that the Obama administration had the authority to wipe away or reduce the debt of millions of borrowers. But the justices ruled on Friday that it was unfair for those borrowers to be left without relief. Chief Justice John Roberts wrote for the majority that the HEROES Act gives the Education Secretary “wide latitude to waive or modify the terms of federal student loan programs, including repayment, and to alter our usual rules regarding discharge of those loans”. He said the forgiveness plan “fits comfortably within that delegation.” The dissenting opinion was written by Justice Elena Kagan. She argued that the court was substituting itself for Congress and the executive branch in making national policy about student loan forgiveness.
Supreme Court’s Student Loan Forgiveness Decision
Chief Justice John Roberts authored the majority opinion in the case, siding with six Republican-led states that sued to block the program. The state of Missouri argued that the loan servicing entity it operates, the Missouri Higher Education Loan Authority (MOHELA), would lose $44 million per year in fees if the Biden plan is allowed to go forward. Roberts agreed and found that Missouri has standing to sue.
Justice Elena Kagan wrote a sharp dissent, accusing the majority of being opportunistic and political in nature. She cited the fact that some of the other justices joined in the decision and that the court had not even discussed other theories of standing. Borrowers and advocates were disappointed by the ruling. One of the plaintiffs, Claude Reed, 74, said that he had been struggling for years to pay off his student debt and is now facing having money deducted from his Social Security. He says the ruling is going to make his situation even worse and that it will be especially difficult for low-income people.
How to Know if My Student Loan Will be Forgiven?
If you’re unsure whether your student loan will be forgiven, calculate your discretionary income. This is the amount you have left over after paying for basic needs, such as food and housing. It’s calculated using a formula that takes into account your annual income, family size, and geographic location. You can use an online tool to help you determine your eligibility. You can apply for deferment or forbearance if you don’t have enough income to meet your monthly payments. This will give you a temporary reprieve from making your loan payments, but it won’t prevent interest from accruing. If you’re unable to afford your monthly payment, you may end up in default, which can affect your credit score and future borrowing ability.