The Supreme Court struck down President Joe Biden’s executive order to cancel up to $20,000 of student loan debt for borrowers on Friday. The plan was estimated to cost $400 billion over 30 years, according to the Congressional Budget Office.
The lawsuit, Biden v. Nebraska, saw six states suing Biden for invoking the HEROES Act to cancel the debt. Kansas, one of the involved states, joined Nebraska, Missouri, Iowa, Arkansas and South Carolina in the case.
With a 6-3 vote along party lines, the conservative Supreme Court said, in its opinion by Chief Justice John Roberts, “As the Government concedes, ‘waiver’—as used in the HEROES Act—cannot refer to ‘waiv[ing] loan balances’ or ‘waiving the obligation to repay’ on the part of a borrower.”
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Biden’s plan would have canceled up to $430 billion of loans for 43 million Americans, according to a White House press release on Aug. 24, 2022. This would have canceled the remaining balance of 20 million borrowers.
Following the Supreme Court’s ruling, Biden announced alternative actions to student loan relief following the COVID-19 pandemic, including a 12-month “ramp-on” process starting in October. The process will ensure that borrowers who miss monthly payments during this time “are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies,” according to the White House press release.
