The Supreme Court on Friday rejected President Joe Biden's plan to eliminate roughly $400 billion in student debt, dealing a major blow to millions of borrowers nationwide.

What You Need To Know

  • The Supreme Court's 6-3 conservative majority rejected President Joe Biden's plan to eliminate roughly $400 billion in student debt

  • Biden's plan would have eliminated $10,000 in student loans for borrowers with incomes of less than $125,000, or households earning less than $250,000; Pell Grant recipients would have seen up to $20,000 in loans wiped away

  • The plan was set to affect around 43 million Americans and entirely clear the balances of about 20 million; twenty-six million borrowers had already applied to the program

  • In remarks at the White House later Friday, President Biden outlined a "new path" to provide student debt relief for Americans following the high court's ruling

The 6-3 ruling along the high court's ideological lines killed the president's plan to eliminate $10,000 in federal student debt for those with incomes of less than $125,000, or households earning less than $250,000. Pell Grant recipients, who come from low-income families, would have been eligible for an additional $10,000 in relief.

The plan was set to affect around 43 million Americans and entirely clear the balances of about 20 million. The Congressional Budget Office had said the program would cost about $400 billion over the next three decades.

Twenty-six million people had already applied to the program. Loan repayments, which have been paused since March of 2020 due to the COVID-19 pandemic, are set to resume at the end of August.

The Biden administration had said it is well within its rights to implement the program based on the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act. The law, they said, allows the education secretary to modify or waive loan provisions during a national emergency — in this case the COVID-19 pandemic.

But the high court ruled that the administration overstepped its authority, with Chief Justice John Roberts writing for the majority that the act "provides no authorization" for the plan.

"Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree," Roberts wrote for the majority, saying that Education Secretary Miguel Cardona's modifications "created a novel and fundamentally different loan forgiveness program."

Justice Elena Kagan, one of the three liberals to dissent, said that the court's conservative majority "overrides the combined judgment of the Legislative and Executive Branches, with the consequence of eliminating loan forgiveness for 43 million Americans."

"From the first page to the last, today’s opinion departs from the demands of judicial restraint," Kagan wrote. "At the behest of a party that has suffered no injury, the majority decides a contested public policy issue properly belonging to the politically accountable branches and the people they represent."

In remarks at the White House later Friday, President Biden promised that his administration would pivot to provide debt relief to student loan borrowers in the wake of the high court's ruling.

“I believe the court's decision to strike down my student debt relief program was a mistake,” Biden told reporters Friday. “I’m not going to stop fighting to deliver borrowers what they need, particularly those at the bottom end of the economic scale. So we need to find a new way.”

That new way, Biden said, involves authorizations within the Higher Education Act of 1965 that would allow Education Secretary Miguel Cardona to compromise, waive or release loans. In addition, the Department of Education has established the “most affordable repayment plan ever created,” which is intended to help borrowers save more than $1,000 per year.

Republicans cheered the ruling, while Democrats and other advocates urged President Biden to take additional actions to eliminate student debt.

Florida Sen. Rick Scott called Biden's plan "a publicity stunt" and "unconstitutional," while Kansas Sen. Roger Marshall called it a "student loan scheme" that was "nothing more than a kickback to his far-left political base."

“A president cannot just wave his hand and eliminate loans for students he favors, while leaving out all those who worked hard to pay back their loans or made other career choices," former U.N. ambassador and 2024 GOP presidential candidate Nikki Haley said in a statement. "The Supreme Court was right to throw out Joe Biden’s power grab.”

Biden charged that "the hypocrisy of Republican elected officials is stunning."

The debt relief, he suggested, would have “freed millions of Americans” from a “crushing burden,” would have allowed more borrowers a path toward home ownership, to start businesses, to start families.

“These Republicans blocked all that,” Biden said. He then jabbed at Republicans, noting that the near-universally supported COVID-era Paycheck Protection Program cost around $760 billion — often with relief funds going straight to businesses owned by Republican lawmakers. His debt relief plan instead, he said, would have cost half that, with an average per-person amount of $10,000 to $20,000 in debt forgiven.

“The hypocrisy is stunning. You can’t help a family making 75 grand a year, but you can help a millionaire and have your debt forgiven?” Biden said.

Senate Majority Leader Chuck Schumer, D-N.Y., called the ruling "hypocrisy," citing recent ethics questions related to some Supreme Court justices.

"As justices accept lavish, six-figure gifts, they don’t dare to help Americans saddled with student loan debt, instead siding with the powerful, big-monied interests," Schumer wrote on Twitter.

"This fight is not over," Massachusetts Sen. Elizabeth Warren, a leading progressive voice in the fight to cancel student loans, wrote in a statement. "The President has more tools to cancel student debt — and he must use them. More than 40 million hard working Americans are waiting for the help that President Biden promised them, and they expect this administration to throw everything they’ve got into the fight until they make good on this commitment."

"The Supreme Court's decision to strike down the President's student debt program is a clear disregard for what millions of Americans need - especially Black Americans," NAACP President and CEO Derrick Johnson wrote in a statement. "Despite today's upsetting ruling, we demand that the Biden Administration delivers on the promise of student loan debt relief.

"Education has long been regarded as a path toward generational wealth, economic liberation, and securing the American dream," Johnson continued. "Let's be clear - student debt is killing that dream. The NAACP will not stop until student debt relief becomes a reality. America has so easily forgiven greedy corporations for their debts - why would they refuse to provide the same grace and investment in our own students?"

The high court's justices expressed skepticism when they heard arguments in two cases challenging Biden's plan in February. Six Republican-led states challenged the plan, arguing it would have been an unearned "windfall" for millions of borrowers.

“Canceling hundreds of billions of dollars in student loans—through a decree that extends to nearly all borrowers—is a breathtaking assertion of power and a matter of great economic and political significance,” the six GOP-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina —  said in their legal brief.

The Biden administration's top attorney argued that some borrowers will be at “risk of delinquency and default because of the continuing economic consequences of the COVID-19 pandemic.”

Spectrum News' Ryan Chatelain contributed to this report.