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The Supreme Court Just Axed Student Debt Relief. What Happens Next?

July 1, 2023 admin Comments Off
The Supreme Court just killed student debt relief, ruling 6-3 that Biden’s program, which would have canceled up to $20,000 per borrower, is not authorized by the HEROES Act.

More than 40 million people had qualified for debt forgiveness under Biden’s plan, and nearly 90% of the benefits for out-of-school borrowers would have gone to people earning less than $75,000.

These people have been stripped of relief not just by this conservative Court, but by a coalition of billionaires and corporate interests that funded this case behind the scenes.

But this isn’t the end of the story. The Biden administration still has a tried-and-true legal authority to cancel student debt, one that Congress has authorized and that’s already been used repeatedly—including by the Trump administration—to wipe out federal student debt.

Here’s how it works: the Higher Education Act in 1965 gave the Secretary of Education the authority to make or back federal student loans. It also gave the Secretary broad and unrestricted power to cancel or write down that debt — to “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” Secretary Betsy DeVos even used it to cancel debt for certain borrowers.
President Biden could direct current Secretary Miguel Cardona to use that power to relieve millions of people of crushing debt. (If you’re wondering — they don’t need to stop at $20,000. They have the power to cancel ALL federal student loans if they wanted to.)

Biden’s initial attempt to cancel student loan debt, which the Supreme Court has struck down, was based on much more fragile legal standing. Biden had cited the HEROES Act of 2003, which gave the Education Department the power to “waive or modify” student loans for people affected by a “national emergency.” The Biden administration said the COVID pandemic was a national emergency that justified his student debt relief program and the Supreme Court disagreed.

But the Higher Education Act doesn’t have the same limitation. President Biden can and should use it to ensure that student loan borrowers are given the debt relief that they desperately need right now.

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