Republican Lawmakers Cost Their Citizens Billions in Killing Blow to Student Loan Forgiveness 

The Fall of Student Loan Forgiveness

On June 30, 2023, the Supreme Court issued a monumental decision on the final day of its 2022 term. The majority conservative court blocked President Biden’s Student Loan Forgiveness Program. Even while no debt had yet been canceled, the program received over 26 million applicants for relief last year, and the Biden administration approved 16 million of them. There was overwhelming support for the forgiveness program.

Despite the program’s popularity, a group of Republican-led states and other conservative bodies challenged the program in court. The Republican lawmakers said that the executive branch does not have the power to cancel student debt in such a broadly proposed program. 

In a 6-3 decision, the Supreme Court ruled that the Biden Administration did not have authority under a 2003 federal law to forgive hundreds of billions of dollars of student debt. In the decision, written by Chief Justice John Roberts, the high court ruled in favor of the six states who brought the case forward - Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina. 

What Does This Mean for Residents of the 6 States?

Over 4.6 million people in the 6 states that brought suit were eligible for relief under the forgiveness program. This means, the Attorneys General in these states cost their constituents nearly $65 billion - roughly $10 billion per state. 

If a lawmaker’s job is to represent the best interests of the citizens who elected them, these Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina lawmakers have severely missed the mark. Yet, they will not bear the cost, instead, their citizens will pay it.

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What Is Biden’s Plan Going Forward?

President Joe Biden gave his remarks concerning the Supreme Court’s decision on the Student Loan Forgiveness Program only hours after the decision was announced. Maintaining a hopeful attitude, Biden said that he was disappointed in the Supreme Court’s ruling striking down the loan relief program. He maintained that he did not overstep his authority and that he thinks the Supreme Court has misinterpreted the Constitution.

The President emphasized that 16 million eligible borrowers had already been approved. “Then Republican elected officials and special interests stepped in and said no, no, literally snatching from the hands of millions of Americans, thousands of dollars in student debt relief,” said Biden in his remarks. 

“I was about to change their lives” - President Biden

In criticizing those who opposed student loan forgiveness, President Biden noted that many of the same people supported the Paycheck Protection Program implemented during the COVID-19 pandemic when it benefited them. “It was the same elected Republicans, members of Congress, who strongly opposed giving relief to students, that got hundreds of thousands of dollars themselves in relief.” The President added, “Several members of Congress got over a million dollars. All those loans were forgiven, and how much did that program [PPP forgiveness] cost? 760 billion dollars. My program is expensive?”

Biden continued to reprimand the Republicans who opposed the program and brought this case forward. Biden asked, “You can’t help a family making $75,000 a year but you can help a millionaire and have your own debt forgiven?” The President then went on to emphasize the benefits that the plan would have brought America. “It would have been good for the American economy, freeing millions of Americans from the crushing burden of student debt, more homes Would have been bought, more businesses would have been started, more couples would have had the confidence to start a family. Millions of people would have felt that they could get on with their lives.”

The President stated that he would continue to move forward and that his administration is “moving as fast” as it can in trying to find a new way to provide student loan relief. He announced that his administration would provide a new path forward that is consistent with the Supreme Court’s ruling. “We will ground this new approach in a different law than my original plan, the so-called higher education act. That will allow Secretary Cardona, who is with me today, to compromise, waive, or release loans under certain circumstances.”

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What Was the Loan Forgiveness Program?

President Biden introduced his Student Loan Forgiveness plan on August 24, 2022. Upon its release, over 40 million Americans were expected to qualify for federal student loan forgiveness from the Biden administration, with as many as 20 million having their entire loan balance erased. 

Early figures from the Biden Administration showed that no state would have seen less than 45,000 residents qualify for up to $10,000 in loan forgiveness. For larger states like California, Florida, Texas, and New York, those numbers of eligible residents were in the millions. 

The plan was fairly simple in its base terms. Those with federal student loans who earned less than $125,000, or $250,000 for a couple in the ‘21-’22 fiscal year could qualify for up to $10,000 in relief. Additionally, those who received a Pell Grant were eligible for up to $20,000.  Early White House figures showed last year that 90% of this loan relief would have gone to borrowers earning less than $75k a year. 

The White House fact sheet showed that high-population states would see the greatest impact and benefit from the loan forgiveness program. States like California, Florida, Texas, and New York each would have had more than 2 million borrowers expected to qualify for the lower threshold of $10,000 in forgiveness. Moderately sized states like Michigan, North Carolina, Georgia, Illinois, New Jersey, Ohio, and Pennsylvania would have seen more than 1 million qualifying borrowers in that threshold. Even the smallest states would have seen a significant number of eligible borrowers. Wyoming would have seen roughly 50,000 borrowers receiving up to $10,000 each, and North Dakota would have seen roughly 82,000 borrowers in the same category. 

The big hitter - the Pell Grant recipients - would have seen the greatest benefit in each state. Pell Grant recipients qualified for up to $20,000 in forgiveness. Texas and California have over 2.3 million each, which would have qualified for forgiveness.