Biden’s Student-Loan Plan Deserved Its Demise

In a 6-3 decision, the Supreme Court ruled Friday that President Joe Biden’s administration lacks the authority to unilaterally cancel federal student-loan debts. The ruling is a political defeat for the White House and a disappointment for millions of student-loan borrowers. It has also spared the country from the worst consequences of a misguided policy.

Biden’s executive order was issued last August, before legal challenges put it on hold. It proposed canceling $10,000 in debts for all borrowers with incomes below $125,000, or $250,000 for married couples. Some lower-income students would have up to $20,000 forgiven. According to the White House’s estimates, some 20 million Americans would’ve had their debts wiped out altogether.

The administration claimed it had the authority to act under the provisions of the HEROES Act, a law passed after the Sept. 11, 2001, terrorist attacks that empowered the secretary of education to modify financial-aid programs “in connection with a war or other military operation or national emergency.” In Friday’s ruling, Chief Justice John Roberts rejected Biden’s attempt to use the Covid-19 pandemic as justification for bypassing Congress and canceling student-loan debts with a stroke of a pen. “The authority to ‘modify’ statutes and regulations allows the Secretary to make modest adjustments and additions to existing regulations,” Roberts wrote, “not transform them.”

On fiscal grounds alone — to say nothing of fairness or the Constitution — the demise of Biden’s plan should be welcomed. It would’ve cost taxpayers at least $329 billion over the next decade, with the richest two-fifths of households reaping 42% of the benefits, while those in the bottom fifth receive only 12%. Even those figures understate the policy’s regressivity. Canceling debts across the board subsidizes those who attended college at the expense of the 40% of Americans who don’t — even though student borrowers take on their debts voluntarily and can expect to have significantly higher lifetime earnings.

In the wake of the ruling, Biden promised to waive penalties for borrowers who fail to resume payments once the pandemic-era moratorium ends on Oct. 1. Progressive groups want the administration to go further and provide alternative paths to debt cancelation, even if that means ignoring the court altogether. Biden should resist. Willfully defying the court’s decision might please a segment of the president’s base, but it would inevitably spark another wave of time-consuming litigation while compounding taxpayer losses, worsening partisan divisions and undermining the rule of law.