Supreme Court rejects student-loan relief plan

Supreme Court rejects student-loan relief plan
The high court tossed out President Joe Biden's plan to slash the student debt of more than 40 million people.
JUN 30, 2023
By  Bloomberg

The Supreme Court tossed out President Joe Biden’s plan to slash the student debt of more than 40 million people, rejecting one of his signature initiatives as exceeding his power.

The justices, voting 6-3 along ideological lines, sided with six Republican-led states that sued to challenge the program, which by one estimate would have cost $400 billion over 30 years. 

Writing for the court, Chief Justice John Roberts said the administration was “seizing the power of the legislature” by trying to cancel more than $400 billion of student debt.

Biden is likely to face renewed pressure from lawmakers and advocates of loan relief to find an alternative way to cancel debt, possibly using a different legal rationale. For now, the high court ruling strips him of an accomplishment as he looks toward his reelection bid next year.

Student loan payments are set to resume in late August after a three-year pause. Millions of people could fall behind on their debt.

The three liberals said the court should have concluded the states lacked the legal right to challenge the loan relief. “In every respect, the court today exceeds its proper, limited role in our nation’s governance,” Justice Elena Kagan wrote for the dissenters.

The conservative-dominated Supreme Court has thwarted Biden’s agenda on multiple occasions. The court stopped Biden from blocking evictions during the pandemic and requiring workers to get Covid vaccines or regular tests. The justices have also slashed the Environmental Protection Agency’s power to address climate change and protect wetlands. 

Biden’s plan would have forgiven as much as $20,000 in federal loans for certain borrowers making less than $125,000 per year, $250,000 for households.

The administration contended the student-loan program was authorized by a 2003 law that gives the education secretary special powers when responding to national emergencies. The law, known as the Heroes Act, says the secretary can “waive or modify” provisions to ensure that debtors “are not placed in a worse position financially” because of a national emergency.

The case is Biden v. Nebraska, 22-506.

Short-duration high-yield bonds a sweet spot, says RBC fund manager

Latest News

Advisors seek transparency on DIY investing as Robinhood faces investigation
Advisors seek transparency on DIY investing as Robinhood faces investigation

'I feel like they have created an addictive gaming culture, which is not healthy for investing.'

Dynasty forges RIA custody partnership with Goldman Sachs
Dynasty forges RIA custody partnership with Goldman Sachs

The collaboration gives Dynasty's $105 billion network of over 500 advisors access to new custodial services, asset management, and lending expertise.

Investors turn cold on hottest emerging-market ETF as China back in favor
Investors turn cold on hottest emerging-market ETF as China back in favor

Record redemptions from the ex-China strategy came as money managers consider Beijing's latest stimulus push and Chinese AI optimism.

BlackRock boosts private market ambitions with new model portfolios
BlackRock boosts private market ambitions with new model portfolios

The "first of its kind" customizable portfolios, offered through a UMA, blend the giant asset manager's private strategies with public market access.

Consumers are turning increasingly gloomy, that's bad for business
Consumers are turning increasingly gloomy, that's bad for business

Most CFOs see a US recession within the next year or two.

SPONSORED Beyond the all-in-one: Why specialization is key in wealth tech

In an industry of broad solutions, firms like intelliflo prove 'you just need tools that play well together'

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies