Supreme Court Strikes Down President Biden's Student Loan Scheme | Citizens Against Government Waste

Supreme Court Strikes Down President Biden's Student Loan Scheme

The WasteWatcher

The Supreme Court’s decision that President Biden’s proposed student loan forgiveness plan is unconstitutional validates arguments against the egregious, inflationary, and inequitable proposal that Citizens Against Government Waste has been making since it was first proposed.  President Biden’s plan would have wasted taxpayer dollars and disproportionately harmed lower-income Americans who never attended college and was blatantly unfair to those who have already paid off their student loans. 

The Supreme Court’s decision, issued on June 30, 2023, the last day of the Court’s session, is a massive victory for taxpayers across the country.  As the Council for Citizens Against Government Waste noted in a May 23, 2023 letter to the House of Representatives, income-based forgiveness would cost between $250 to $300 billion, and forgiving all outstanding debt would cost $1.7 trillion. 

The President’s proposal would have doubled down on the reckless fiscal policies that have become commonplace in his administration and disproportionately benefitted wealthy Americans.  According to the Penn Wharton Budget Model, more than 70 percent of the debt forgiveness would have been given to households in the top 60 percent of income distribution.  In addition to the financial burden the plan would have placed on Americans, for those who never attended college or were responsible and already paid off their loans, it was the most unfair, outrageous, and disgraceful decisions in many years.  

And there was even bipartisan criticism of the plan.  President Obama’s Council of Economic Advisors Chairman Jason Furman tweeted on August 24, 2022, “Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.  Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.”

In his arguments for the 6-3 majority in the student loan case, Chief Justice Roberts said that the HEROES Act of 2003, which was used as the underlying basis for the plan, did not provide specific authority to forgive student loans.  He wrote that prior decisions by the Court require “that Congress speak clearly before a department secretary can unilaterally alter large sections of the American economy.”  The HEROES Act allows modifications or waivers of existing financial assistance programs, not a complete rewriting of the statute.

Blanket student loan forgiveness has been the goal for progressive Democrats for many years.  Sen. Elizabeth Warren (D-Mass.) was named Citizens Against Government Waste’s October 2022 Porker of the Month for her proposal to take President Biden’s scary $10,000 student loan forgiveness plan and turn it into a nightmare by forgiving up to $50,000 in student debt per borrower. 

If Democrats are serious about alleviating the burden of student loans, they should consider implementing more stringent requirements on those who receive federal student loans.  Under the current system, colleges are not incentivized to drive down the cost of school or improve the quality of education because they know Uncle Sam will foot the bill.  Forgiving student loan debt would do nothing to drive down the cost of higher education, and would likely lead to colleges raising tuition even higher.  And the most effective way to avoid paying off a student loan is to not take one out in the first place, since it is and has always been a voluntary and legal contractual commitment.

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