A Close Look at the U.S. Supreme Court’s Decision Invalidating the Biden Administration’s Student Loan Forgiveness Plan and its Potential Legal Repercussions and Impact on Student Loan Borrowers

Consumer Finance Monitor

Last Friday, the U.S. Supreme Court ruled that the Biden Administration did not have the legal authority to proceed with its plan to forgive approximately $400 billion in federal student loans. After reviewing the background of the two cases, we first look at the majority opinion authored by Chief Justice Roberts and discuss the majority’s legal analysis for concluding that the Missouri Attorney General had standing to challenge the plan, that the HEROES Act’s text did not authorize the Secretary of Education to forgive the loans, and that the “major questions” doctrine should be applied to assess whether Congress had given loan forgiveness authority to the Secretary. We also look at Justice Kagan’ dissenting opinion and the dissent’s rationale for rejecting the majority’s conclusions. We then look at the decision’s potential repercussions for future challenges by state agencies to actions by federal agencies and for the application of the “major questions” doctrine to such challenges. We conclude by discussing the decision’s impact on borrowers, including the ending of the moratorium on federal student loan payments and actions already announced by the Administration or that might be taken to provide relief to borrowers facing the resumption of payments.

Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, hosts the conversation joined by Tom Burke, a partner in the Group.