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White House suffers major setback as SCOTUS strikes down student loan forgiveness plan

White House suffers major setback as SCOTUS strikes down student loan forgiveness plan

In a significant setback for the Biden administration, the US Supreme Court on Friday halted the president’s ambitious student loan forgiveness plan.

The program, which was intended to relieve up to $20,000 of debt for millions of borrowers, was rejected in a 6-3 ruling led by Chief Justice John Roberts. The decision, which marks a victory for conservatives who called the plan “wild” illegal, adds fuel to the 2024 presidential race debate and raises concerns for borrowers betting on relief from their outstanding debts.

The ruling, written by Chief Justice John Roberts, was issued by a 6-3 majority of the nation’s highest court.

Roberts argued that the Biden administration and the education secretary had effectively rewritten the law.

“The Secretary’s proposed plan to largely forgive the debt cannot really be referred to as a waiver: it not only repeals the current provisions, but also greatly improves and expands them,” Roberts wrote. “Regardless of the broad interpretation of ‘waiver or modification,’ it cannot sanction the complete reworking of the law that has occurred here.”

Roberts stated that this initiative needs the explicit approval of Congress.

“The question is not the need to act; it’s about who has the power to implement it.”

Those in the minority felt that the majority was essentially making political decisions. Justice Elena Kagan criticized the Court’s decision, writing that it was acting as an adjudicator of political disputes, rather than legal issues. He criticized the court for repeatedly usurping Congress and the Executive Branch, along with the vast number of individuals they represent, to make crucial and often contested policy decisions.

The White House hoped to use the authority given by the HEROES Act to discharge the debt. Biden’s plan was aimed at helping borrowers who earned less than $125,000 in 2020 or 2021 (or $250,000 for households). Biden claimed that this relief program was indispensable to avoid an increase in defaults or defaults among those affected by Covid who have outstanding loans.

The White House said it had received 26 million applications for the program before a lower Texas court issued a national injunction in November. Of these, 16 million had been approved for relief.

Opponents of the program, which include Republican- and conservative-controlled states, argued that the executive order was an illegal effort to wipe out about $430 billion in federal student loan debt.

The Court’s decision means that borrowers who would benefit from Biden’s plan will not receive the promised debt forgiveness. Student loan payments, which were halted due to the Covid-19 pandemic, will resume in October.

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