Supreme Court strikes down President Biden’s student loan forgiveness program
The Supreme Court on Friday struck down the Biden Administration’s student loan forgiveness program, one that would have provided up to $20,000 of debt relief for an estimated 40 million Americans.
For many students, the decision is a crushing blow, eliminating federal student loan debt relief for roughly 40% of student loan borrowers.
“Debt is a really hard thing to overcome,” said Julien Elliot, a 21-year-old at San Jose State University. “I’ve even seen my mom struggle with it: she just finished paying off her student loan debt, and she’s 55 years old.”
The decision came after two suits were brought to the Supreme Court, one from a group of Republican states that challenged the administration’s authority to cancel student debt, and the other from two students who felt they wouldn’t get enough out of the existing program. Since the Biden administration announced the debt relief plan last August, the government has approved 16 million applications for relief — but the news wasn’t welcomed by all Americans.
“You should be owning the decisions you make when you go to college, and when you sign that dotted line that says: I’m taking out a loan for x dollars,” said Utkarsh Jain, spokesperson for the Berkeley College Republicans. “We need to own up to our mistakes and actions and not put everything on other people, because they have lives as well.”
Over the past few decades, student debt has exploded in both the Bay Area and across the country. From 2003 to 2018, an analysis from the Federal Reserve Bank of San Francisco found student debt in the region had increased by 243%. During the same time period, the percentage of the adult population with student debt doubled, with the median balances increasing from $13,685 to $17,489 in 15 years.
Still, critics warned the plan wouldn’t address the high cost of college, and could lead to an uptick in tuition costs down the line. Students might be encouraged to take out more debt if they believe they’ll be forgiven later, opponents said, and colleges could feel more emboldened to raise their tuition.
They also pointed to the cost. Biden’s debt relief program would have cost between $469 and $519 billion over 10 years, according to an analysis by the University of Pennsylvania’s Wharton School of Business. And, there’s the issue of fairness. the Texas Public Policy Foundation, a right-leaning think tank, highlighted how graduates who’ve already paid their student debt wouldn’t benefit from the policy, nor those who didn’t attend college at all.
“Someone making $125,000 a year doesn’t need help paying their student loans,” said Andrew Gillen, a senior policy analyst at the Texas Public Policy Foundation. “The better solution, in my opinion, is to rely on the existing (income-based) payment plans we already have.”
On the other hand, advocates say the debt relief program would open doors for graduates across the country, and lessen the heavy weight of students debt. It would also help those who — even with advanced degrees — are working in jobs where it can be difficult to pay off debt, like social work or teaching. An analysis from the Education Department found that nearly 90% of the benefits would go toward people earning less than $75,000 per year.
Advocates also say the program would have been good for the economy because graduates who don’t have to pay off student debt could spend their income on other things, and raise the living standards for millions of people. And while some worry that forgiveness programs would harm inflationary risks, proponents point out that this policy would differ quite drastically from pandemic-era checks handed out to the American populace. Instead of $20,000 just appearing in a graduate’s bank account, individuals would be relieved of their monthly payments.
Regardless of the decision, students will still be required to repay their paused debt this fall. It will be the first time debt repayments will resume since March of 2020. Student loan interest will begin accumulating again in September, while payments will be due the following month.
“Without (debt forgiveness), it’s like, man – what will people do?” said 25-year-old David Razo, another San Jose State student.
Nearly half of Americans supported the Biden Administration’s plan, according to a May poll from USA Today and market research company Ipsos. That rate surged among those who have student loans, with 83% of those Americans supporting Biden’s plan, and 75% of those supporting a policy that would go even further: the forgiveness of all federal student loan debt, as long as graduates are still under an income threshold.
But despite debt, age and partisanship among respondents, seven in 10 agreed that the government should prioritize making college more affordable for students, and only a third wanted the court to overturn the Biden Administration’s debt forgiveness program.
Vondell Pilcher, a graduate student at San Jose State, agreed. Once you have student debt, it affects everything in your life, he said – especially if you’re coming from a low-income family.
“If the program doesn’t pass, then what are they (legislators) going to do instead?” Pilcher said. “What’s the alternative for students who have no other choice?”