The U.S. Supreme Court this Friday handed a blow to the Biden administration and tens of millions of college students, by the way. Its nine judges reversed the partial cancellation of education loans granted by the Department of Education in the final sentence of the court case. The Supreme Court ruling particularly hurts students of lesser means, mostly Hispanics and African Americans. It is the second legal setback for these groups after the conservative supermajority of the Supreme Court of six judges against three on Thursday dealt a fatal blow to positive discrimination in university access based on applicants’ ethnicity.
The same majority has backed the new ruling, which agrees with the six plaintiff states, with a Republican majority believing that the Biden administration had no authority to order that removal without Congressional approval. However, the president is rebelling and promised on Friday he would use a new formula to ease the burden of student debt. At the same time, he has slammed Republicans for opposing the measure while benefiting from much larger cuts in student loans. Pandemic.
The Joe Biden administration decided to provide $10,000 in general debt relief based on a provision of a post-September 11, 2001 statute called HEROES. The amount could be as high as $20,000 for recipients of Pell Grants, a widespread federal program of Department of Education loans that benefits some six million students from low-income families. The measure involved the cancellation of around $400 billion. For Biden, it was one of the central arguments in the search for the young voice for his re-election campaign in 2024.
The 77-page sentence was signed by Supreme Court President John Roberts and includes a dissenting individual opinion from Liberal Elena Kagan, supported by Ketanji Brown Jackson and Sonia Sotomayor. Roberts writes: “Secretary [de Educación, Miguel Cardona] He claims that the HEROES Act gives him the power to cancel student loans. It is not so. It is our opinion today that you may “repeal or amend” any existing statutory or regulatory provision that applies to financial assistance programs under the Education Act, but you cannot rewrite this charter from scratch.” Elsewhere, the President goes further and says Cardona transcended the way in which “the French Revolution ‘changed’ the status of the French nobility” when it “abolished their rights and replaced them with an entirely new regime”.
For his part, Kagan argued that the government had the power to draft the plan and that the verdict would affect “40 million Americans.”
“This fight is not over yet,” Biden said this Friday. “My government’s student debt relief plan would have been the lifeline needed by millions of hard-working Americans to recover from a once-in-a-century pandemic,” he added. “It would have changed the lives of millions of Americans and their families. And it would have been good for economic growth in both the short and long term,” he said in a statement.
He then called Republicans “hypocrites” for “obviously” pushing to make former President Donald Trump’s tax cuts permanent, which would constitute “handouts to the wealthiest Americans” while they fight the student tax cuts. “It’s not about reducing the deficit. It’s not about fairness. It’s just about forgiving them the loans they have to pay back.”
Biden has pledged that he will seek to pass another student debt relief program based on a 1965 statute, the Higher Education Act, which gives the Secretary of Education the power to “change rights, titles, claims, liens, etc .to oblige to waive or release them.” claim, however acquired, including any shares or rights of redemption”.
Biden has also said the Department of Education will not refer borrowers who are 12 months late on their student loans to the credit bureaus to give borrowers time to “get back on track.”
The decision also comes at a time when the three-year moratorium on the disbursement of these loans, imposed by the pandemic, is expiring. This moratorium decreed in September; Payments for beneficiaries of this pause will resume from October.
Borrowers were eligible for this partial waiver if their individual income was less than $125,000 ($250,000 for married couples), excluding the top 5% of the population. According to the White House, the decision could benefit up to 43 million people, and that includes removing the entire balance for about 20 million.
Since 1980, the total cost of public and private four-year colleges has tripled, even adjusting for inflation. Pell Grants used to cover almost 80% of the cost of a four-year public university degree for students from working families, but now they only cover a third. This has left many low- and middle-income students with no choice but to take out loans if they wish to pursue a college degree in a country where tuition fees for both public and private universities are much more expensive than other countries.
The White House has argued that skyrocketing federal student loan debt — $1.6 trillion and rising for more than 45 million borrowers — is placing a significant strain on America’s middle class. “They struggle with high monthly payments and rising balances that make it difficult for them to accumulate wealth, buy homes, save money for retirement and start small businesses,” he argued.
For the most vulnerable borrowers, the impact of leverage is even worse. According to a Department of Education analysis of a recent sample of college students, nearly a third of borrowers have debt but no title. Many of them could not complete their studies because the tuition fees were too high.
Approximately 16% of borrowers default, which can result in the government spiking their wages or downgrading their credit ratings – a number critical to the financial health of American society.
The burden of student debt also weighs disproportionately on African-American communities. According to a report from Massachusetts’ Brandeis University, the average black student who entered college in the 1995-96 school year still owes 95% of his original college debt twenty years after he first enrolled.