The Supreme Court of the United States ruled 6-3 that U.S. Pres. Joe Biden overstepped his authority when his administration launched a program that would cancel up to $20,000 of student loans for college debtors nationwide.
A coalition of Attorneys General, including Missouri’s, filed a lawsuit in the U.S. District Court for the Eastern District of Missouri in St. Louis alleging that the debt cancellation program violates the Administrative Procedure Act (APA).
“The decision probably makes sense,” said Kenneth Warren, St. Louis University professor of political science. “It's an overreach for the President. So, I expected it to be struck down and I don't think it's totally fair either.”
Justice Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson dissented.
As previously reported in the St. Louis Record, Biden’s forgiveness plan would have freed up money for students who want to pursue higher education and provide others with the financial freedom to incur more debt than they otherwise might have initially planned to do.
“There are people who complain because they paid off their student loans and now it's going to be forgiven for others,” Warren told the St. Louis Record. “There's a fairness question here.”
Former AG Eric Schmitt turned U.S. Senator, who has since been replaced by Darren Bailey, along with AGs in Nebraska, Arkansas, Iowa, Kansas, and South Carolina, argued in the lawsuit that interest income on more than $400 billion in federal student loan debt would be lost to states nationwide if the perk had been allowed to proceed.
“Missouri argues probably rightfully that it would lose money through loan forgiveness and that has to do with the lending associations in Missouri that would lose money if the loans are forgiven and they don't have to pay the financial institutions financing the loans,” Warren said.
Some 43 million Americans were expected to benefit from the loan forgiveness program, according to White House data.
In their June 30 opinion, the nation's highest court determined Missouri has standing to challenge the debt-relief program due to the Missouri Higher Education Loan Authority (MOHELA).
"Courts are generally willing to grant standing," Warren added. "Standing is a prerequisite legal issue that's argued before the case goes on to be argued on the basis of merits and one of the states in the lawsuit was Missouri."
As previously reported in the St. Louis Record, the debt forgiveness program would have deprived MOHELA of ongoing interest payments and revenue the forgiven loans would have generated.