Today, the Supreme Court ruled 6-3 that the Biden Administration’s student debt relief program is unlawful and beyond the scope of executive authority. The program would have eliminated up to $10,000 of student debt for borrowers earning up to $125,000 per year ($250,000 for married couples) and up to $20,000 of student debt for borrowers who participated in the Pell Grant program. The Court’s striking down of this program is a devastating blow to efforts to improve college accessibility and affordability.
Writing for the majority, Chief Justice Roberts argued the Administration lacks the authority to implement a financial assistance program that modifies existing statute to such an extent without direct action and authorization from Congress. Estimates show the debt elimination could have cost $400 billion, chipping away at the $1.75 trillion in U.S. student debt. Justices Kagan, Jackson and Sotomayor dissented, arguing the states lack the judicial standing to bring the case and that debt elimination as a pandemic response aligns with the intent of the HEROES Act to provide financial relief during national emergencies.
40 million eligible borrowers can no longer expect to benefit from loan forgiveness and instead must plan to repay their loans. Just 4 weeks after the Administration launched the loan forgiveness application, 26 million Americans had applied and 16 million had been fully approved before the application process halted due to litigation. According to the White House, 90% of forgiveness benefits would have gone to borrowers no longer in school and earning less than $75,000 per year.
According to IWPR’s recent research, student parents are likely to be especially vulnerable to the adverse financial impacts of the Court’s decision. Nearly one-fifth of undergraduate students are raising children, and they are much more likely to take out loans and miss payments than their non-parent peers.
Student loan payments compound the financial challenges that student parents already face and create barriers to degree completion. Two-thirds of student parents report experiencing low income and food and housing insecurity. Black student parents are further disadvantaged as they hold more debt than other student parents, and over two-thirds of Black single mothers do not complete a degree within six years of enrollment, due in large part to mounting student debt. Biden’s loan forgiveness program would have provided total debt erasure for 29% of borrowers. Instead, the Supreme Court’s decision maintains the status quo on student debt inequality.
In the absence of further Congressional action on this issue, President Biden must explore all options within his executive authority to protect student borrowers and alleviate the burden of student loans. Further, student parents’ access to federal and state assistance can be improved by including education as an eligibility criterion for participating in basic needs assistance and social safety net programs, and by removing or reducing work requirements for eligibility.
This decision hinders President Biden’s ability to fulfill a key campaign promise, but this Administration can still support student loan borrowers. In addition to exploring all available options for debt forgiveness, debt disparities can be equitably addressed through increased funding for community colleges, tribal universities and historically Black colleges and universities, where student parents are more likely to be enrolled. The federal government can also create more affordable paths to higher education by expanding the Pell Grant and Public Service Loan Forgiveness programs. States can better leverage federal stimulus funding toward wraparound services for student parents that support entire families including child care options, workforce reentry training, and basic needs like food and housing security.
With loan interest accrual resuming September 1 and payments due in October, student borrowers need swift action in the wake of this decision.