US Supreme Court nixes Biden's $400 billion student debt cancellation plan

WASHINGTON, United States — The US Supreme Court dealt President Joe Biden a significant political setback Tuesday when it overruled his landmark program to cancel the student debt of millions of Americans.

The court said Biden had overstepped his powers in cancelling more than $400 billion in debt, in an effort to alleviate the financial burden of education that hangs over many Americans decades after they finished their studies.

The conservative-dominated court voted six to three in the ruling, saying the president should have obtained specific authorization from Congress to launch the program.

It said Biden was mistaken in using a 2003 law, the Higher Education Relief Opportunities for Students Act, to justify the debt relief plan.

Six Republican-led states sued saying the 2003 act, which aimed to help former students who joined the military after the September 11, 2001 attacks, does not authorize Biden's loan cancellation.

"We agree," Chief Justice John Roberts wrote in the majority opinion.

"The question here is not whether something should be done; it is who has the authority to do it," he said.

Biden "strongly" disagrees with the Supreme Court's decision and will later "make clear he's not done fighting yet," a White House source said shortly after the ruling, speaking on condition of anonymity.

Nearly 43 million Americans hold $1.6 trillion in federal student loans, and some end up repaying them over decades as they start jobs and families.

Biden announced the plan in August 2022, saying that up to $20,000 per borrower -- only those from low or middle-income groups -- would be forgiven.

The plan came on the back of student loan payment freeze instituted by his predecessor Donald Trump during the Covid-19 pandemic.

But the court said Biden did not have the power to unilaterally erase so much debt; that power is held by Congress, which oversees US finances.

"Among Congress's most important authorities is its control of the purse," wrote Justice Neil Gorsuch.

The court's three progressive justices all dissented in the decision.

Justice Elena Kagan wrote that the court itself was overstepping its powers in the case. 

She argued that none of the states who sued to challenge Biden's policy had standing to do so -- they neither had a personal stake or incurred an injury by the policy.

"We do not allow plaintiffs to bring suit just because they oppose a policy," she said.

She also argued the 2003 act does permit the policy, and that the court anchored its decision mainly on the very size of the debt cancellation and its impact on national finances.

"The result here is that the court substitutes itself for Congress and the executive branch in making national policy about student-loan forgiveness," she wrote.