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Supreme Court decision strikes down President Biden's Student Loan Debt Relief Plan

Elected officials seek alternate measures after Supreme Court ruling; White House has another plan of action

Washington D.C. – Last week, The U.S. Supreme Court on ruled that the Biden administration does not have the legal authority to enact a one-time student debt relief program, dealing a blow to the 40 million Americans who would have qualified. The program would have delivered up to $20,000 of relief to millions of borrowers struggling with outstanding debt.

"But today’s decision has closed one path. Now we’re going to pursue another," said President Joe Biden. "I’m never going to stop fighting for you. We’ll use every tool at our disposal to get you the student debt relief you need and reach your dreams."

The U.S. Secretary of Education weighed in on the Supreme Court's final ruling, disappointed in the outcome.

"Today, the Supreme Court ruled against students and families across the country. It's an outrage that lawsuits brought on by Republican elected officials have blocked critical student debt relief that would have been a lifeline for more than 40 million Americans—nearly 90 percent of whom make less than $75,000 a year," said U.S. Secretary of Education Miguel Cardona.

"President Biden, Vice President Harris, and I will never stop fighting for borrowers, which is why we are using every tool available to provide them with needed relief. Earlier today, the Department of Education initiated a regulatory process to provide debt relief, so we can help the working- and middle-class borrowers who need it most."

In light of the Supreme Court’s ruling, President Biden and his Administration have already taken two steps aimed at providing debt relief for as many loan borrowers as possible, as fast as possible:

  • The Secretary of Education initiated a rulemaking process aimed at opening an alternative path to debt relief for as many working and middle-class borrowers as possible, using the Secretary’s authority under the Higher Education Act.

  • The Department of Education (Department) finalized the most affordable repayment plan ever created, ensuring that borrowers will be able to take advantage of this plan this summer—before loan payments are due. Many borrowers will not have to make monthly payments under this plan. Those that do will save more than $1,000 a year.

In addition, to protect the most vulnerable borrowers from the worst consequences of missed payments following the payment restart, the Department is instituting a 12-month “on-ramp” to repayment, running from October 1, 2023 to September 30, 2024, so that financially vulnerable borrowers who miss monthly payments during this period are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.

"Additionally, the Department finalized our new income driven repayment plan, Saving on A Valuable Education (SAVE)," explained U.S. Secretary of Education Cardona, "which will be the most affordable repayment plan in history. It will cut monthly payments to zero dollars for millions of low-income borrowers, save all other borrowers at least $1,000 per year, and stop runaway interest that leaves borrowers owing more than their initial loan."

Members of Congress also expressed their disappointment in the Supreme Court's ruling:

"Today, the Supreme Court has chosen to side with Republican state officials who would rather score political points against President Biden than help hard-working Americans being crushed by student loan debt. To say that I am disappointed would be an understatement, " said U.S. Rep. Terri Sewell.

"In light of this terrible decision, I am calling on my colleagues in Congress to take action to combat the student debt crisis and make higher education more affordable for our students."

Republican leaders praised the decision of the Supreme Court. In fact,U.S. Senate Republican Minority Leader Mitch McConnell (R-KY) referred to President Biden's failed, student-debt proposal as a "student loan socialism plan."

“The American people know that the Biden Administration’s student loan socialism plan would be a raw deal for hardworking taxpayers," said McConnell. "Now that the Supreme Court has rejected the Administration’s position in Biden v. Nebraska, they can know that it’s illegal."

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