The US Supreme Court ruled Friday that the government does not have the authority to forgive student loans of up to $20,000, as President Joe Biden called for during the COVID-19 pandemic.
In one of its most anticipated rulings, the high court’s decision directly affects some 40 million people throughout the country. Six judges voted against and three in favor.
The court, with a conservative majority, had temporarily blocked the start-up Biden’s plan to forgive student debts up to $20,000.
The administration argued that it is doing the right thing, applying the 2003 Heroes Act that gives the US secretary of education the authority to make changes to the federal student loan system during national emergencies, such as the COVID-19 pandemic. 19 that crossed the country when the condonation plan was launched.
WHAT WAS THE BIDEN PLAN?
The government wanted to forgive up to $10,000 of student debt for those earning less than $125,000 and up to $20,000 for recipients of Pell Grants, which are awarded to undergraduate students.
The announcement brought hope to more than 40 million people with student debt of thousands of dollars, which amounts to more than $1.6 trillion across the country, according to the White House.
Under the government’s plan, economic relief was limited to the amount of outstanding debt. For example: If a person was eligible for $20,000, but had a remaining balance of $15,000, he would only receive $15,000 of forgiveness.
Biden said at the time that many students’ debt was “unsustainable” and that “the ticket to a better life” of having a higher education is “very expensive.”
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BIDEN WOULD ANNOUNCE NEW MEASURES
A White House source told NBC News that the Biden administration disagrees with the magistrates’ decision, but that they were prepared for this scenario.”
“The president will make it clear that he is not done fighting yet and will announce new actions to protect those who have student loans,” the source said.
“We will also make it very clear to students and their families that Republicans are responsible for denying them the relief that President Biden has been fighting to get to them,” the source added.
THE ARGUMENTS AGAINST THE PLAN
Opponents of student debt forgiveness say the government is misusing the law, which was passed after the 9/11 terrorist attacks and provided relief to affected borrowers.
“It is not a blanket provision to get out of debt that an administration can invoke at will,” six Republican-led states wrote in their lawsuit against the plan.
The lawyer who argued on behalf of the government in the Supreme Court, Attorney General Elizabeth Prelogar, insisted that she was acting directly within the purview of the law to avoid distress for borrowers during national emergencies.
“There hasn’t been a national emergency like this in as long as the Heroes Act has been on the books that has affected so many borrowers,” Prelogar said during oral arguments in late February.
“And I think it’s not surprising to see in response to this once-in-a-century pandemic.”
Regardless of the Supreme Court ruling, the forgiveness plan will end at the end of August. More than 40 million Americans will have to start repaying their federal student loans again by the end of the summer under the terms of a debt-ceiling deal passed by Congress.
