The Supreme Court of the United States ruled against U.S. President Joe Biden’s student loan forgiveness plan in a 6-3 decision released this morning. The Nebraska v. Biden decision effectively strikes down Biden’s plan, impacting more than 40 million Americans who would qualify for the debt relief program.
The ruling will impact many Emory students. After Biden’s plan went into place, a student told the Wheel in September 2022 that they would have qualified for up to $20,000 in loan forgiveness.
After the relief plan was introduced, Abri Rochte (24B) expressed gratitude for the plan.
“I’m thankful that there’s loan forgiveness at all,” Rochte said in September 2022. “I think it’ll cut my amount that I owe upon graduation in half.”
Yasmeen Ahmed (24C) said the Supreme Court’s past two days of controversial decisions — such as striking down affirmative action in higher education — have been upsetting to witness, especially after waking up this morning to see that the Supreme Court overruled Biden’s plan and backed business’ right to refuse service to same-sex couples.
“All of it's ridiculous,” Ahmed said. “I feel like we're moving backwards in time. It feels like pre-civil rights.”
Conservative Justice John Roberts wrote the majority opinion for Nebraska v. Biden, with conservative Justice Amy Coney Barrett concurring. Liberal Justice Elena Kagan filed a dissenting opinion, which liberal Justices Sonia Sotomayor and Ketanji Brown Jackson joined.
This decision was largely expected based on the oral arguments for Nebraska v. Biden, as well as the Supreme Court’s 6-3 conservative majority.
According to a SCOTUSPoll, an annual national survey of the public opinion surrounding Supreme Court cases conducted by scholars at Harvard University (Mass.), Stanford University (Calif.) and The University of Texas at Austin, Americans’ views on whether the Biden administration overstepped its authority with the loan forgiveness plan are split along party lines.
Under Biden’s student debt relief plan, which the White House announced on Aug. 24, 2022, if a student who received a Pell Grant in college and met the income threshold were eligible for up to $20,000 in debt relief. Students who did not receive a Pell Grant but met the income threshold were eligible for up to $10,000 in debt relief.
The student debt relief plan aimed to “provide more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic.”
In his rationale for the program, Biden cited that while the total cost of attending both public and private four-year institutions has nearly tripled since 1980, federal financial support for students attending college has not increased at the same rate. For instance, Pell Grants used to cover almost 80% of one’s degree from a four-year public institution, but they now only cover about 33%.
In Nebraska v. Biden, Nebraska and five other states — Missouri, Arkansas, Iowa, Kansas and South Carolina — filed the lawsuit to challenge Biden’s student loan forgiveness program. The states alleged that the program violates the separation of powers and the Administrative Procedure Act (APA) “because it exceeds the Secretary’s statutory authority and is arbitrary and capricious.”
The APA outlines how federal agencies develop and issue regulations by providing requirements for publishing proposed and final rulemaking notices in the Federal Register and allowing the public to comment on proposed rulemaking notices.
Of the six states involved in Nebraska v. Biden, the Supreme Court decided that “at least Missouri has standing to challenge the Secretary’s program,” as the plan would cost the Missouri Higher Education Loan Authority (MOHELA), which charges Missourians fees to process their student loan debt, about $44 million per year.
“The harm to MOHELA in the performance of its public function is necessarily a direct injury to Missouri itself,” the decision’s syllabus reads.
However, Kagan disagreed with the notion that Missouri has standing to challenge the program, writing in a dissenting opinion that the state of Missouri “relying” on injuries to MOHELA, which is legally and financially independent, “contravenes a bedrock principle of standing law—that a plaintiff cannot ride on someone else’s injury.”
“That means the Court, by deciding this case, exercises authority it does not have,” Kagan wrote. “It violates the Constitution.”
Attorneys for the U.S. Department of Education and U.S. Department of Justice argued that Biden’s plan is constitutional due to precedent set by the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act), which allows the U.S. secretary of education to the federal student loan system to alleviate hardships during national emergencies like COVID-19.
The Supreme Court rejected this reasoning on the basis that the program was not explicitly approved by Congress.
“Our precedent— old and new—requires that Congress speak clearly before a Department Secretary can unilaterally alter large sections of the American economy,” Roberts wrote in the opinion.
The Department of Education’s Office of Federal Student Aid responded to the ruling, noting that they “are reviewing the Court’s decision to determine next steps.”
Associate Professor of Political Science Andra Gillespie said this decision will largely impact people who stand on the socioeconomic middle ground, especially Black women.
“It's gonna hurt people who are lower income — not necessarily, in some instances depending on where people go to school, not necessarily the lowest, lowest income folks — but folks who have just enough money where there might be an expectation that they've got to pay for something,” Gillespie said.
Biden’s student loan forgiveness plan was also challenged by individual borrowers, Myra Brown and Alexander Taylor, in Department of Education v. Brown. Brown found herself ineligible for relief under Biden’s plan because her loans are being held by commercial entities and not the government. Meanwhile, Taylor is only eligible for $10,000 rather than a full $20,000 because he did not receive a Pell Grant.
However, the Supreme Court released a unanimous decision to dismiss Department of Education v. Brown this morning, asserting that Brown and Taylor did not have standing to challenge the plan. This means that Brown and Taylor were not able to demonstrate that there was a clear disadvantage to Biden’s plan, Associate Professor of Political Science Bernard Fraga explained.
“If you had student loans that weren't forgiven, you don't have standing,” Fraga said. “You're not harmed by someone else's loans being forgiven.”
MOHELA’s existence kept Nebraska v. Biden from facing the same fate as Department of Education v. Brown, according to Fraga. He explained that if the state of Missouri had not created a corporation to make “additional money off of student loan debtors” via fees, there would be no identifiable disadvantage to warrant a challenge against Biden’s plan.
“That’s wild,” Fraga said. “It's only because of the system of fees and loan servicing that this case is even before the court and that the plaintiffs even have standing that's leading to about 20 million Americans not having their loan debt forgiven.”
Tackling student loan debt was one of Biden’s key campaign promises. The president spoke out against the decision on June 30, claiming that “the hypocrisy of Republican elected officials is stunning.”
“They had no problem with billions in pandemic-related loans to businesses – including hundreds of thousands and in some cases millions of dollars for their own businesses. And those loans were forgiven,” Biden said. “But when it came to providing relief to millions of hard-working Americans, they did everything in their power to stop it.”
Biden added that his administration is working to take a new approach to student loan debt relief, which he said will rely on the Higher Education Act of 1965 and be consistent with today’s Supreme Court decision. The new approach will allow U.S. Secretary of Education Miguel Cardona to "compromise, waive or release loans under certain circumstances."
The new approach will also include an temporary 12-month “on-ramp repayment program” in preparation for payments resuming in October, according to Biden. Although student loans will not be put on pause and bills will still be due, the on-ramp program will temporarily alleviate the possibility of default or credit damage. The Department of Education also will not refer borrowers who miss payments to credit agencies for 12 months.
Additionally, Biden’s administration will decrease income-driven payments from 10% to 5% of borrowers’ disposable incomes.
Fraga said that although there are several avenues Biden and the Department of Education could take in an attempt to relieve student loans, Republican attorney generals will likely try to find another legal argument to undermine new plans.
“They don't think student loan debt forgiveness is moral,” Fraga said. “Despite the vast majority of Americans thinking that the student loan debt forgiveness is completely justified, especially given the pandemic and the economic inequality that we're seeing today, it's really through a series of legal loopholes that cases are brought before the Court and, just like this one, student loan debt forgiveness is invalidated.”
Gillespie said that Biden is delivering on his campaign promise to forgive student loans, even though the Supreme Court struck down his plan. She explained that loan forgiveness was “never going to be easy” and requires collaboration on both sides of the political spectrum, including politicians who disagree with Biden’s goals.
“It would have been one thing for him to promise student loan relief and then not do anything to try to act on it, but he did,” Gillespie said. “He got stopped by the Supreme Court. At the end of the day, I think you have to ask whether or not that's his fault.”
Emory implications
Among the top 25 national universities, Emory is tied at No. 4 — and at No. 2 among private universities — for the highest percentage of students who receive a Pell Grant, at 19%. Emory outpaces peer institutions like Rice University (Texas) (17%), Brown University (R.I.) (14%) and Duke University (N.C.) (12%) in the percentage of its student body that receives Pell Grants.
Additionally, among elite colleges, Emory ranks No. 5 in having the highest share of students who come from the bottom quintile at 6%, meaning their families make $20,000 or less annually. In comparison, Northwestern University (Ill.) ranks No. 29 at 3.7%, Johns Hopkins University (Mass.) ranks No. 41 at 2.9% and Washington University in St. Louis ranks lowest, at No. 65, with less than 1% of its students coming from the bottom quintile.
Emory students’ median household income is $139,800, just over the $125,000 threshold to qualify for Biden’s loan forgiveness plan.
According to the U.S. Department of Education College Scorecard for Emory, 22% of students receive federal loans to help pay for college, and Emory students’ median total debt after graduation is $18,250. In comparison, according to the Department of Education, the average undergraduate who takes out loans graduates with about $25,000 in debt.
A higher percentage of Emory students receive federal loans and graduate with more debt compared to students at some peer institutions. At Vanderbilt University (Tenn.), 10% of students receive federal loans, and students’ median debt after graduation is $14,000. At the University of Chicago, 6% of students receive federal loans, and students’ median debt after graduation is $15,000.
Assistant Vice President of University Communications Laura Diamond wrote in an email to the Wheel that Emory eliminated need-based loans and began replacing them with institutional grants and scholarships at the start of the 2022-23 academic year. Each year, the University provides undergraduate, graduate and professional students with more than $350 million in institutional grant and scholarship aid, according to Diamond.
This change was an expansion of the Emory Advantage program.
“The Emory Advantage program gives more students the opportunity to graduate debt-free, reflecting the university’s commitment to making an Emory education accessible to talented students regardless of their financial resources,” Diamond wrote. “This program is just one aspect of Emory’s ongoing effort to support students.”
Update (7/9/2023 at 8:49 p.m.): This article was updated to include comments from Associate Professor of Political Science Andra Gillespie.
