The Fate of the Biden Administration’s Student Loan Plan
On June 30th, 2023, the Supreme Court of the United States struck down the Biden administration’s one-time student loan forgiveness plan that would have relieved up to 20,000 dollars of student debt for over 40 million Americans (CNN).
In the United States, millions of student loan borrowers owe a collective 1.6 trillion dollars of debt to the US government. In the summer of 2022, the Biden Administration announced a one-time relief plan in order to revert financial harms caused by the COVID-19 pandemic. This program would have been one of the federal government’s most expensive actions, forgiving approximately 430 billion dollars of student debt (NYT).
This program was challenged by six Republican-controlled states that claimed they would be severely impacted when attempting to finance this relief plan. In addition, the states believed that this plan was not under the jurisdiction of the federal government and it interfered with loan-servicing within these states.
The Supreme Court made a 6-3 decision that blocked debt forgiveness under this plan. The majority opinion, written by Chief Justice John Roberts, states that broad debt cancellation is not viable under the Higher Education Relief Opportunities for Students Act (HEROS Act). This act allows the Secretary of Education to forgive student debt during wartime or national emergencies, which in this case referred to the COVID-19 pandemic.
Millions of student loan borrowers have expressed a collective sense of hopelessness and disappointment, as the plan possessed the potential to completely erase the debt of over 20 million individuals (CNN).
However, shortly after the decision, the Biden Administration released several other student loan forgiveness plans that provided borrowers with alternatives for student debt relief under the Higher Education Act.
Though this Supreme Court ruling prevented the government from eliminating over 430 billion dollars of student debt in America, the Biden Administration managed to wipe out 127 billion dollars for student-debt payers by accelerating these existing debt-relief programs. These programs include Public Service Loan Forgiveness, where those who work in government institutions and nonprofit organizations can get their debt canceled after 10 years, as well as income-driven repayment options.
Student loan debt forgiveness is important for Americans for a multitude of reasons — primarily with bridging systemic inequities within the US education system and improving quality of life for millions of Americans.
According to Time, student debt relief will have intergenerational impacts, as it will allow families to accumulate wealth and support relatives to pursue and complete their own degrees in higher education. In addition, debt relief can help bridge the racial wealth gap present in the United States and increase educational equity across individuals with different socioeconomic backgrounds.
When debt is relieved, people have more opportunities to start business, creating more jobs for others, more people can afford houses, pay other debt, and ultimately improve mental health.
In response to the Supreme Court decision, Secretary of Education Miguel Cardona said, “I'm right there with you, and we're not done fighting [...] to provide debt relief, to make sure that higher education is more affordable, make sure that people can land on their feet after this pandemic and just open doors to higher education”.
by JAHNAVI BOLLEDDULA