In a 6-3 decision, the Supreme Court ruled on June 30 that the President did not have the authority under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 to provide the widespread loan forgiveness he proposed last August.  The Justices ruled that the proposal was of too large a scale to meet the provisions of law.

Chief Justice John G. Roberts’ majority opinion focused on the authority provided in the law to the Secretary of Education to “waive or modify” loan provisions in the case of a national emergency. In Justice Robert’s view, providing loan forgiveness to all borrowers went well beyond the intention of the HEROES legislation. 

Associate Justice Amy Coney Barrett wrote a concurrence that focused on the cost of the forgiveness being so large as to undermine Congress’ power of the purse. Both Justices cited the “major questions” doctrine that is being used with increasing frequency by the courts.

Writing for the minority, Associate Justice Elana Kagan disagreed. She noted that the HEROES Act was written in the post 9-11 environment after Congress had passed two specific pieces of legislation following other national emergencies and delegated expansive power to the Secretary to make waivers and modifications to the federal student programs so that Congress did not have to act each time a national emergency occurred. Justice Kagan also criticized the majority’s use of the “major questions” doctrine, which, in her view, undermines Congress’s ability to delegate to administrative agencies, and inappropriately positions the Supreme Court as, “the arbiter – indeed, the maker – of national policy.”

Hours after the Supreme Court decision, the Biden Administration announced they would continue to pursue student loan debt relief using a different tactic.  The Administration said they were jumpstarting a new negotiated rulemaking on debt relief  with a public hearing on July 18.  Negotiated rulemaking is a lengthy regulatory process outlined in the Higher Education Act that can take two years or more to implement. 

The Department also announced a new repayment plan called Saving on a Valuable Education (SAVE), that provides the most favorable terms ever for borrowers.  The plan would sharply reduce borrowers’ monthly payments by cutting the cap on payments from 10 percent to 5 percent of discretionary income, raising the payment pause threshold for lower-income borrowers, and forgiving interest above the monthly payment amount for those making regular monthly payments.  Borrowers currently enrolled in the REPAYE IDR plan will automatically be enrolled in the new SAVE plan, and those who apply for SAVE this summer will be processed before repayments start later this year. 

Finally, the president announced a 12-month “on-ramp” to repayment that would provide borrowers scheduled to resume payments on September 1 assurances that they cannot fall into delinquency or default because of missed, partial or late payments. The proposals led Congressional Republicans to claim that the effort violated the agreement made as part of the debt ceiling negotiations for student loan payments to resume by September 1.