Supreme Court strikes down student debt relief program

Key takeaways:

• The debt relief program could have canceled about $430 billion in student loans.
• The court ruled that the Biden administration does not have authority under the HEROES Act to cancel the debt.

The U.S. Supreme Court has ruled 6-3 against President Joe Biden’s proposed student debt relief program, a decision that could impact health care professionals with significant student loans, an expert said.

The Biden v. Nebraska case revolved around whether the Higher Education Relief Opportunities for Students (HEROES) Act grants the Biden administration the authority to forgive about $430 billion in student loans.

In the event of a national emergency, the HEROES Act allows the secretary of education to waive or modify federal student loan programs under Title IV of the Higher Education Act.

In the majority opinion, Chief Justice John Roberts Jr. wrote that Biden’s plan is not authorized under the HEROES Act, adding that the language was not specific enough and that “modify” carries limitations and is meant to be read as a change that is minor or moderate.

“While Congress specified in the Education Act a few narrowly delineated situations that could qualify a borrower for loan discharge, the Secretary [of Education] has extended such discharge to nearly every borrower in the country,” the ruling stated. “It is ‘highly unlikely that Congress’ authorized such a sweeping loan cancellation program ‘through such a subtle device as permission to ‘modify.’”

In August, the Biden administration proposed providing up to $20,000 in relief for Pell Grant recipients with an individual income of less than $125,000, according to a White House press release. Borrowers who met the criteria but were not recipients of a Pell Grant were eligible for up to $10,000 in relief.

However, the plan was put on hold following opposition from several challengers. The plaintiffs of Biden v. Nebraska — Nebraska, Kentucky, Missouri, Iowa, Kansas and South Carolina — had argued that the relief program violated the separation of powers and the Administrative Procedure Act, according to Oyez, a multimedia judicial archive.

In a dissenting opinion, Justice Elena Kagan argued that the six states had no legal standing because they carried no personal stake, and that “to decide the case is to exceed the permissible boundaries of the judicial role.”

“Congress authorized the forgiveness plan (among many other actions); the Secretary [of Education] put it in place; and the President would have been accountable for its success or failure. But this Court today decides that some 40 million Americans will not receive the benefits the plan provides, because (so says the Court) that assistance is too ‘significant,’” Kagan wrote. “With all respect, I dissent.”

In a statement, Biden called the ruling “wrong” and “disappointing,” adding that his administration will “continue to work to bring the promise of higher education to every American.”

Lawrence O. Gostin, JD, Founding Linda D. & Timothy J. O’Neill Professor of Global Health Law and director of the O’Neill Institute for National and Global Health at Georgetown University, told Healio the decision “will significantly impact the lives of doctors who are saddled with major debt.”

A report from the Association of American Medical Colleges found that 73% of medical graduates reported having education debt in 2019. The median debt for indebted medical school graduates was $200,000. This was even higher among certain underrepresented groups, with non-Hispanic Black students having a median education debt of $230,000.

The ruling will be the most impactful for physicians “who are not well off and those practicing in underserved communities,” Gostin said.

The Biden v. Nebraska case is one of two cases against the student debt relief program. The second case, Department of Education v. Brown, was brought upon by two student loan borrowers who did not qualify for the $20,000 in loan forgiveness and argued they were not given the proper time to be able to weigh in on the program, according to Oyez. The court unanimously ruled that the plaintiffs did not have legal standing.

After a 3-year pause, student debt payments will begin again in October, with interest starting on Sept. 1, according to the U.S. Department of Education’s Office of Federal Student Aid. The payments were set to resume at this time regardless of how the Supreme Court ruled today, CNN reported.

References:

• Biden v. Nebraska. https://www.oyez.org/cases/2022/22-506. Accessed June 30, 2023.
• Biden, President of the United States, et al v. Nebraska. https://www.supremecourt.gov/opinions/22pdf/22-506_nmip.pdf. Accessed June 30, 2023.
• COVID-19 Emergency Relief and Federal Student Aid. https://studentaid.gov/announcements-events/covid-19. Accessed June 30, 2023.
• Department of Education v. Brown. https://www.oyez.org/cases/2022/22-535. Accessed June 30, 2023.
• Fact sheet: President Biden announces student loan relief for borrowers who need it most. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/. Published Aug. 24, 2023. Accessed June 30, 2023.
• Physician education debt and the cost to attend medical school. https://store.aamc.org/downloadable/download/sample/sample_id/368/. Accessed June 30, 2023.
• Statement from President Joe Biden on Supreme Court decision on student loan debt relief. https://www.whitehouse.gov/briefing-room/statements-releases/2023/06/30/statement-from-president-joe-biden-on-supreme-court-decision-on-student-loan-debt-relief/. Published June 30, 2023. Accessed June 30, 2023.
• Use of the HEROES Act of 2003 to cancel the principal amounts of student loans. https://www.justice.gov/olc/file/1528451/download#:~:text=The%20Act%20provides%20that%20the,certain%20statutory%20objectives%20are%20achieved. Accessed June 30, 2023.