The Supreme Court’s recent decision to strike down President Biden’s student loan forgiveness plan has had far-reaching implications.
The ruling not only poses a significant challenge to the president’s reelection campaign but also dashes the hopes of millions of Americans who were promised relief from their financial burdens.
Supreme Court Delivers Blow to Biden’s Student Loan Forgiveness Plan
The justices’ 6-to-3 vote, largely split along ideological lines, sheds light on the reasoning behind the decision and reveals two critical takeaways.
- Republican justices determine that states have standing: One of the main hurdles for those seeking to legally challenge President Biden’s student loan forgiveness plan was establishing legal standing, a requirement typically necessary to bring a lawsuit.
- This criterion exists to prevent the judicial system from being used as a forum to settle policy disputes more appropriately addressed through elections.
The six GOP-led states—Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina—that succeeded in having Biden’s plan invalidated argued that the policy would result in lost profits for companies servicing federal student loans within their respective states.
Chief Justice John Roberts, in the majority opinion for Biden v. Nebraska, cited the Missouri Higher Education Loan Authority (MOHELA), stating that the forgiveness plan would cause MOHELA to lose around $44 million annually in loan servicing fees.
Roberts concluded that at least Missouri had successfully demonstrated legal standing, eliminating the need to address the standing issue for the other states.
Legal experts and consumer advocates expressed skepticism about the impact of Biden’s plan on MOHELA’s bottom line.
They noted that the lender’s revenue was expected to rise due to recent departures of some student loan servicers from the market, allowing MOHELA to acquire additional accounts.
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Ruling Raises Questions on Standing and Heroes Act Limitations
Some questioned why MOHELA did not file its own lawsuit, as it has the ability to do so independently.
The Court’s handling of the standing issue surprised many observers, particularly since conservative justices, including the late Justice Antonin Scalia, have traditionally defended the requirement.
Luke Herrine, an assistant professor of law at the University of Alabama, noted the Court’s seemingly lax approach to the matter, raising questions about its potential implications as a precedent.
- Heroes Act’s Limitations on Debt Cancellation: President Biden invoked the Heroes Act of 2003 as the legal basis for his student loan forgiveness plan, which aimed to forgive up to $20,000 in education debt for millions of Americans.
- In response to the 9/11 terrorist attacks, Congress approved the Heroes Act, which gives the president extensive authority to alter student loan policies when a national emergency arises.
The administration argued that the Covid-19 pandemic constituted such an emergency, citing the dire financial situations faced by millions of borrowers and the potential for a historic surge in delinquencies and defaults without loan forgiveness.
However, the Supreme Court ruled against the president, highlighting that the language of the Heroes Act did not provide for broad debt cancellation and did not specifically address the circumstances of the current crisis.
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