Supreme Court Strikes Down $430 Billion Student-Loan Forgiveness Plan | WSJ

the Supreme Court struck down President Biden's student loan forgiveness program which was set to wipe out nearly 430 billion dollars in debt the 6-3 decision signals to millions of borrowers that they must begin paying back their debt after a three-year pause as a result of the pandemic for borrowers around the country who had been making financial decisions based on the hope that they would see this forgiveness it could have major implications to their pocketbooks Biden student loan forgiveness plan which was announced last August sought to permanently forgive up to twenty thousand dollars in federal student debt for millions of Americans 95 percent of the borrowers can benefit from these actions that's 43 million people more than 26 million people applied for the program or were automatically eligible and of those 26 million more than 16 million were approved for loan cancellation by the education department the plan would cost the federal government more than 400 billion dollars the question is really whether the president has the authority himself to wipe away potentially hundreds of billions of dollars in student loan debt or whether Congress needed to give explicit authority to the president to do that Chief Justice John Roberts said in the opinion that while the education secretary a member of President Biden's cabinet has the authority to waive or modify existing statutory or regulatory Provisions applicable to financial assistance programs under the Education Act he is not allowed to rewrite that statute from the ground up writing in dissent for the Court's three liberals Justice Elena Kagan accused the majority of exceeding the Court's proper limited role in our nation's governance before Biden's forgiveness proposal borrowers were already receiving debt relief after president Trump announced a suspension on payments due to the kova 19 pandemic nearly three years later those who were hoping to see at least some of their loans forgiven will have to restart their payments not only they're gonna are they going to have to resume payments for the first time in three years but they're also going to have to potentially pay on a larger balance than they might have expected before once resumed the typical student loan payment will be between 210 and 314 dollars a month according to a Wells Fargo report and those payments come in a time when borrowers are facing higher prices and inflation people have gotten used to not having to make these payments and they've used that money for other things that money is now going to need to be put towards something different and so that could really change the way the households Dole out their their payments every month the share of households with student loan debt has more than doubled from 1989 to 2019. with 30 percent of black households 20 percent of white households and 14 percent of Hispanic households holding debt in 2019. if you're paying back student loans through this they call income-based repayment my plan is to cut your payments in half on the 2020 campaign Trail Biden promised that he would erase or significantly reduce student loan debt and he campaigned on his executive action again before last year's midterm elections we're following through on a promise I gave to millions of Americans student loans just a little more breathing room so as we enter the 2024 election season it will be notable to see who voters blame for this outcome do they blame Republicans and conservative majority Supreme Court for striking it down or do they blame President Biden for maybe getting out ahead of the skis and putting forward a proposal that would eventually be struck down in the court publicly the Biden Administration projected confidence about the legality of their student loan forgiveness plan we are confident in our legal authority to carry out this program and we won't let these baseless lawsuits stop us either but in private they've been preparing for this very outcome they've considered a bunch of different potential policies in response the main one would allow borrowers with lower incomes to pay a smaller amount on the balance of their loans over time and then eventually have the the rest of their payment either reduced or forgiven and separately they've they've discussed also putting a temporary ban on penalties for people who aren't able to pay their loans that would essentially prevent the federal government from recommending that people go into delinquency for not paying their loans it's essentially like a small reprieve to help people get back into the swing of pay foreign

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Id: knJf2IBUwKU

Length: 4min 30sec (270 seconds)

Published: Fri Jun 30 2023