US supreme court rules out Biden’s proposal to cancel billions of student debt

On August 25, 2022, POTUS Joe Biden announced to waive off a large sum of student debt to address the mounting financial strain on students and their families.

In his address, the president said the borrowers will now be able to “get on top of their rent and utilities, to finally think about buying a home or starting a family or starting a business” with the waiver. 

According to The New York Times report, more than 45 million people across the country owe $1.6 trillion in federal loans for college.

56% owe less than $20,000, while the median student debt is $17,000, says the US Department of Education.

Last week, however, a 6-3 ruling of the Supreme Court effectively ruled out the proposal to forgive student debt.

The Biden administration had earlier relied on the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES ACT) — a 2003 statute that provides authority to the Education Department to relinquish federal loans addressing the economic repercussions — for the waiver. However, the majority of the SC judges ruled that the 2003 law didn’t provide the administration the authority to cancel the debt.

Had the loan relief materialised, student debt of $10,000 an individual and up to $20,000 in some cases would have been forgiven for 30 million borrowers providing $400 billion in debt relief of the $1.6 trillion outstanding.

The ruling is likely to impact more than 40 million American students.

According to the BBC, the Biden administration faced two plaintiffs in the court. Students protested at the apex court shortly following the decision announced.

Republican-led states Nebraska, Lowa, Kansas, South Carolina, Missouri, and Arkansas, including two individual borrowers filed the plaintiffs against the executive decision arguing the executive branch did not have the power to cancel student debt.

Earlier, 31% of Republicans, 69% of independents, and 87% of Democrats favoured the proposal, as per the poll conducted by Marquette Law School in May. 

As far as the case filed by the two individual borrowers is concerned, the court ruled the loan forgiveness proposal would not impact them, also arguing students lack legal standing to challenge it.