The Biden Administration’s efforts to forgive billions of dollars in student loans failed when the U.S. Supreme Court ruled on Friday that the COVID-era HEROES Act did not give the White House authority to unilaterally forgive federally subsidized student loans.
Texas Congressman Jodey Arrington praised the SCOTUS decision, saying, ““I applaud the Supreme Court for overturning yet another irresponsible and unconstitutional Biden executive order that would have set a horrible precedent, supercharged America’s entitlement culture, and shifted the $400 billion financial burden from a few upper income students to the many middle and working class families.”
”President Biden’s regressive student loan bailout not only violated the law and Constitution, but it contradicted basic fairness —to the majority of people who couldn’t afford to go to college, to the taxpayers who will shoulder the burden, and to every student who worked their way through school or responsibly paid back their student loans.”
Chief Justice John Roberts wrote for the 6-3 majority, saying, “The Secretary asserts that the HEROES Act grants him the authority to cancel $430 billion of student loan principal. It does not. We hold today that the Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up.”
Roberts was joined in the majority by Justices Samuel Alito, Neil Gorsuch, Amy Coney Barret, Brett Kavanaugh, and Clarence Thomas.
The first case was decided unanimously, with all justices ruling in Department of Education v. Brown that the two petitioners who were denied debt relief under the program did not have standing to sue the Department of Education.
The second case, Biden v. Nebraska, upheld the right of the several states involved in the lawsuit to sue the Biden administration, clearing the hurdle necessary to present their argument before the court. Roberts contended in the majority opinion, “Six states sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree.”
During the battle for student loan forgiveness, the downside has been largely ignored by the administration and those owing the debt. Potentially, one of the most significant drawbacks of student forgiveness is that the IRS considers the amount of the forgiven balance to be taxable income, which could amount to tens of thousands of dollars owed in taxes.
Additionally, debt forgiveness would increase the demand for college. More demand tends to translate into higher tuition and costs for room and board, books, etc.
Critics of student debt forgiveness also said it was unfair to the 87 percent of Americans who do not hold federal student loan debt, or had paid their loans off, would have to foot the bill, which the nonpartisan Congressional Budget Office calculated would be at least $400 billion. Per-taxpayer, based on 2022 federal tax returns, that would come to about $2,400.
Beyond the cost of forgiveness, the bottom- line basis for the SCOTUS decision was that President Biden’s declaration was unconstitutional and did not comply with federal law in that it was not authorized by Congress and the president has no unilateral authority to spend public tax dollars however he sees fit. Spending statutes are strictly construed to safeguard the separation of powers and prevent presidents from usurping a role that belongs to Congress alone.