The Supreme Court today rejected President Biden's student loan forgiveness plan, ruling that he didn't have the legal authority to waive more than $400 billion owed to the government.
The Arguments
The President based his right to cancel the loans as part of an emergency response to the COVID-19 pandemic and under a 2003 law called the HEROES Act, passed at the time of the Iraq War.
The 2003 HEROES Act said the Education Department could "waive or modify" any provision of the government-funded student loans for any borrower affected by "a war or other military operation or national emergency."
Lawmakers said their goal was to extend temporary relief to those who were called up to serve in Iraq and to make sure they weren't "in a worse position financially" because of their service.
The court opinion states that "The HEROES Act allows the [education] secretary to 'waive or modify' existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, but does not allow [him] to rewrite that statute to the extent of canceling $430 billion of student loan principal."
The Solutions
Borrowers still have available to them
- IDR Recount (Consolidate FFEL Loans by end of year)
- Fresh Start Out of Default
- Potential new IDR Plan that caps at 5% of disposable income
Contact your servicer today to come up with a plan for when repayment starts this Fall. Need more details? Then check out Episode 179 of my Financial Freedom Podcast.