On Friday June 30, the U.S. Supreme Court struck a blow to President Biden's attempt to provide financial relief to student loan borrowers. The President had put forth a plan to forgive up to $20,000 in educational debt from eligible borrowers, citing the Higher Education Relief Opportunities for Students Act (HEROES Act) as legal grounds for the Secretary of Education to act.
The U.S. Supreme Court, however, ruled that the Administration did not have that authority -- thus putting an end to this forgiveness plan. The big question, though, is whether that means the idea is dead forever.
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Is student loan debt relief off the table?
While the HEROES Act cited by the administration gave the Secretary of Education the authority to "waive or modify" regulatory provisions applicable to federal student loan programs, the Supreme Court ruled in a 6-3 decision that interpreting this statute to allow debt forgiveness was a "vast overreach."
In the ruling, Chief Justice John Roberts indicated that large scale debt-relief on the order the President was talking about would require an act of Congress. The ruling suggests that if the President attempted to offer forgiveness via executive order under other existing statutes, such as the Higher Education Act of 1965, the Court would likely also halt this effort as well.
So, while President Biden may pursue other ways to protect student loan borrowers, the Administration likely will be unable to wipe away debt unilaterally without the support of the legislative branch.
With control of Congress currently split and the Republicans controlling the House of Representatives, it is unlikely that the legislature is going to move forward with helping the President offer debt relief. In fact, many prominent GOP leaders have spoken out against the President's proposals related to debt forgiveness.
This does not, however, mean that forgiveness is never going to happen in the future. It just means that until after the 2024 election, it's extremely unlikely any borrowers will have their debt eliminated under a broad relief plan.
A future Congress could still take action to forgive student loan debt
The Supreme Court did not preclude the idea of student loan debts ever being forgiven. The Court's conservative majority simply indicated that Congress must be the branch to act. In other words, debt discharge would need to occur through the ordinary legislative process.
With a Republican House unlikely to offer support for any kind of loan forgiveness, it is all-but-a-given that loan forgiveness is likely to become a key campaign issue in the 2024 election. In fact, the issue of loan forgiveness may impact not just the presidential race but also congressional races in key districts as well as constituents come out in support of or opposition to candidates who run on promoting or blocking student loan forgiveness.
If the democrats retain control of the White House and Senate and take back the House in 2024, loan forgiveness may be a top priority of the new administration -- especially if anger lingers at the conservative court blocking the President's efforts to provide relief.
Unless or until a new Congress is sworn in, though, loan forgiveness is off the table for the foreseeable future. Borrowers who are struggling should look into alternatives, such as income-driven payment plans, if they worry about their ability to cover their debt obligations once monthly payments resume following a pause put in place during the COVID-19 pandemic.
