A sharply divided Supreme Court ruled Friday that the Biden administration overstepped its authority in trying to cancel or reduce student loans for millions of Americans.
The 6-3 decision, with conservative justices in the majority, effectively killed the $400 billion plan, announced by President Joe Biden last year, and left borrowers on the hook for repayments that are expected to resume by late summer.
The court held that the administration needs Congress' endorsement before undertaking so costly a program. The majority rejected arguments that a bipartisan 2003 law dealing with student loans, known as the HEROES Act, gave Biden the power he claimed.
“Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree,” Chief Justice John Roberts wrote for the court.
Justice Elena Kagan wrote in a dissent, joined by the court’s two other liberals, that the majority of the court “overrides the combined judgment of the Legislative and Executive Branches, with the consequence of eliminating loan forgiveness for 43 million Americans.”
Decision expected to affect hundreds of thousands of buyers in CT
The court’s decision and the end of the pause on repayments will have a real impact on the roughly half-million Connecticut residents who have student debt, especially borrowers of color, said Cristher Estrada-Peréz, executive director of the Student Loan Fund, a New Haven-based nonprofit that advocates for student debt relief.
“Borrowers are suffering because we have to choose between, ‘Do I pay my student debt, or do I pay my rent? Do I pay my student debt or do I buy food for my kids?’" she said. "So you’re going to have a lot of borrowers who are going to start defaulting on their student loans as soon as the repayment starts because they can’t not afford to do it.”
Estrada-Peréz said she and her organization were committed to continuing to call on Biden to follow through on his yet-unfulfilled campaign promise to cancel student debt.
“I think he needs to be a lot more aggressive and assertive in both reestablishing his commitment to cancel student debt, but more importantly, not just saying that he's establishing the commitment, but actually moving forward,” Estrada-Peréz said.
CT officials criticize court's decision
Gov. Ned Lamont called the Supreme Court's decision a “crushing blow” for the roughly 200,000 Connecticut residents who’d already been approved for the program.
Today’s decision from the U. S. Supreme Court deals a crushing blow to over 200,000 hardworking Connecticut residents who were already approved for this much needed student debt relief (1/4)
— Governor Ned Lamont (@GovNedLamont) June 30, 2023
State Attorney General William Tong, who filed a brief in support of the Biden plan, said the Republican attorneys general who fought against it are actively hurting struggling families.
"This would have really helped," Tong said. "This would have really enabled them to pay their bills or, to buy a house or buy a car, to invest in their kids’ education, to pay for camp right now."
Similarly to Lamont, Connecticut House Democrats – State Reps. Corey Paris, Christine Palm, Eleni Kavros DeGraw and Gary Turco – released a joint statement in opposition to the decision.
“Our society should not perpetuate a system that pushes millions into student debt. Completing college is a major milestone that leads to the American dream. It is a common good and we must protect it in the State of Connecticut,” the statement said.
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Loan repayments are expected to resume by late August under a schedule initially set by the Biden administration and included in the agreement to raise the debt ceiling. Payments have been on hold since the start of the coronavirus pandemic more than three years ago.
The forgiveness program would have canceled $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would have had an additional $10,000 in debt forgiven.
Twenty-six million people had applied for relief and 43 million would have been eligible, the administration said. The cost was estimated at $400 billion over 30 years.
This story has been updated. Connecticut Public Radio's Chris Polansky, Kelsey Goldbach, Patrick Skahill and The Associated Press contributed to this report.
