By Nick Georgelis, Staff Writer
Photo Courtesy of Pixabay.com
Student loan forgiveness, is it a political strategy or genuine solution? In the Supreme Court’s most recent term, it addressed the conflict of student loan forgiveness in Biden v. Nebraska[1] and Department of Education v. Brown[2]. With the Supreme Court ruling in Biden v. Nebraska with a 6-3 majority, they struck down the current student loan forgiveness program.[3] As a result of these cases, student loan debtors will need to prepare to pay their loans without the benefits from this relief plan. However political it may be deemed, the Biden administration is persistently working towards an alternative to this student loan forgiveness program.[4]
Student loan debt in America is an ever-increasing problem, with the average student loan debt increasing by 6.6% each year and tripling since 2007.[5] How can this problem be addressed – state-sponsored repayment programs, public service forgiveness, or cancellation? For 45.3 million borrowers, a solution needs to be found.[6] As of June 2023, the U.S. Supreme Court addressed this issue regarding the Biden administrations student loan forgiveness program.[7]
For reference, the Biden administration’s program would forgive up to $20,000 for certain borrowers.[8] This program would allow individual borrowers making less than $125,000 a year to qualify for relief, with relief applying to most federal student loans.[9] This forgiveness was invoked under the Higher Education Relief Opportunities for Students Act (HEROES). The HEROES Act permits the Secretary of Education to ‘waive or modify’ loan forgiveness in the event of a national emergency and was put to the test during the COVID-19 pandemic emergency. The federal government temporarily paused student loan repayments and eventually used the authority to cancel loans directly as a result of the harm caused by the pandemic.[10] Not long after, states began to sue on the grounds that this plan exceeded the power mandated to the Secretary of Education, leading to decisions under Department of Education v. Brown[11] and Biden v. Nebraska[12].
In Biden v. Nebraska[13], the Supreme Court ruled with a 6-3 decision that the Secretary’s forgiveness plan was not authorized under the HEROES Act.[14] Chief Justice John Roberts wrote the opinion for the majority, with Justice Kagan writing the dissent. It was held first that, of the six states filing this action, at least Missouri had standing to challenge this program, and second, that the language of the HEROES Act does not give the Secretary power to cancel student debt.[15]
The first issue is whether any state has the standing to challenge this program.[16] In order for a plaintiff to bring an action, Article III states that they must have suffered actual harm that is reasonably connected to the challenged conduct. Missouri currently has a nonprofit state corporation, MOHELA, that participates in the student loan market. It was concluded that MOHELA would lose an estimated $44 million dollars a year in fees, therefore, satisfying the Article III requirement of injury in fact.[17]
After ruling that the Court did have standing to hear this case, the issue of whether the words ‘waive or modify’ in the HEROES Act allowed for the cancellation of debt was addressed. The Supreme Court’s interpretation of these words did not include cancellation. It is summarized that their meaning is to be a small modification, not something that expands existing provisions.[18] Justice Roberts wrote, “this plan has ‘modified’ the cited provisions in the same sense that the French Revolution ‘modified’ the status of the French nobility.”[19]
In Department of Education v. Brown[20], the Court unanimously found that individual borrowers lacked the standing to bring a case against this program.[21] Again, under Article III, a plaintiff must suffer actual harm that is a cause of the defendant’s actions. In this case, the Court agreed that individual borrowers who did not get their loans forgiven were not related to this debt cancellation plan. Thus, the Supreme Court lacks jurisdiction to hear a claim from individual borrowers.[22]
The effect of these decisions will ignite debate from both activists and opponents of student loan forgiveness. The average federal student loan debt is currently around $38,000 per borrower.[23] Thus, these decisions will undeniably set an important precedent for student loans.
As of October 2023, the Biden administration has announced it still has been able to cancel nearly $127 billion in student debt. Most recently, they have been approved to give $9 billion in relief through methods such as income-driven repayment programs, public service loan forgiveness, and disability relief.[24] Regardless of the politics behind student loan cancellation efforts, roughly 45 million Americans will potentially need to face an expensive reality.
[1] Biden v. Nebraska, et al., No. 22-506 (2023).
[2] Department of Education, et al. v. Brown, et al., No. 22-535 (2023).
[3] Susan Frederick, Supreme Court Strikes Down Student Loan Forgiveness Program, https://www.ncsl.org/state-legislatures-news/details/supreme-court-strikes-down-student-loan-forgiveness-program (July 10, 2023).
[4] Politico, Biden Promises Not to Give Up On Student Loan Relief, Biden promises not to give up on student loan relief – POLITICO (October 5, 2023).
[5] Melanie Hanson, Average Student Loan Debt, Average Student Loan Debt [2023]: by Year, Age & More (educationdata.org) (May 22, 2023).
[6] Id.
[7] Susan Frederick, Supreme Court Strikes Down Student Loan Forgiveness Program, https://www.ncsl.org/state-legislatures-news/details/supreme-court-strikes-down-student-loan-forgiveness-program (July 10, 2023).
[8] Katie Lobosco, Where Biden’s Student Loan Forgiveness Program Stands, Where Biden’s student loan forgiveness plan stands | CNN Politics (November 10, 2022)
[9] Id.
[10] Id.
[11] Department of Education, et al. v. Brown, et al., No. 22-535 (2023).
[12] Biden v. Nebraska, et al., No. 22-506 (2023).
[13] Biden v. Nebraska, et al., No. 22-506 (2023).
[14] Id. at 2.
[15] Id.
[16] Id.
[17] Id.
[18] Id. at 4.
[19] Id. at 15.
[20] Department of Education, et al. v. Brown, et al., No. 22-535 (2023).
[21] Id. at 2.
[22] Id. at 14.
[23] Melanie Hanson, Average Student Loan Debt, Average Student Loan Debt [2023]: by Year, Age & More (educationdata.org) (May 22, 2023).
[24] U.S. Department of Education, Biden-Harris Administration Announces an Additional $9 Billion in Student Debt Relief, https://www.ed.gov/news/press-releases/biden-harris-administration-announces-additional-9-billion-student-debt-relief (October 4, 2023).
