When did the Supreme Court rule on student loan forgiveness?

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    On June 30, 2023, the Supreme Court struck down President Joe Biden’s student loan forgiveness plan which would have forgiven up to $20,000 per borrower. 

    The decision was ruled 6-3. The court, which has a conservative majority, held that the Higher Education Relief Opportunities for Students (HEROES) Act, under which the forgiveness program was filed, does not give the secretary of education the authority to cancel student loans. It only permits a waiver or modification of the debt, but not to rewrite the statute.

    The HEROES Act allows the secretary of education to waive or change loan forgiveness provisions under the Higher Education Act in case of a war, military action, or a national emergency. 

    The original plan was estimated to erase close to $430 billion in student debts and lower the median amount owed from $29,400 to $13,600. The HEROES Act was invoked by the Office of the General Counsel citing the financial difficulties caused by the COVID-19 pandemic, which was declared a national emergency. As many as 43 billion Americans would have benefitted from the loan forgiveness plan, and half would have their loans entirely forgiven.

    Under Biden’s original student loan forgiveness plan, borrowers who earned less than $125,000 individually or $250,000 as a household would have qualified for up to $10,000 in debt cancellation. Pell Grant recipients would have qualified for up to $20,000 in debt cancellation.

    The White House also reported that it had already received 26 million applications, of which 16 million had already been approved. But none of those applicants will receive forgiveness under Biden’s original plan after this Supreme Court ruling. 

    The Biden administration is working on a backup student loan forgiveness plan. It is estimated that less than 10% of federal student loan borrowers will qualify for this round.

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