Supreme Court Uses Nancy Pelosi Words to Overturn Student Loan Cancellation

The Supreme Court struck down President Joe Biden's student loan forgiveness plan on Friday, and its conservative justices used former House Speaker Nancy Pelosi's words to do so.

Quoting Pelosi during a 2021 press conference, the Court's majority opinion wrote, "People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress."

The justices agreed with six Republican-led states, while disagreeing with two individual borrowers, in a pair of lawsuits that challenged the Biden administration's student debt relief program. Although the Court ruled that the private plaintiffs lacked standing in their challenge against Biden's plan in the Department of Education v. Brown, the justices ruled against Biden in a 6-3 vote in Biden v. Nebraska, effectively shutting the program down.

Biden announced his student loan forgiveness last year, estimating that the plan would wipe the debt of 20 million Americans and provide some relief to the remaining 20 million. The program sought to eliminate up to $10,000 in federal student loan debt for borrowers making less than $125,000 and up to $20,000 for Pell Grant recipients.

In a statement responding to the Supreme Court's ruling, Pelosi criticized the decision, saying it "cruelly" allowed for "a crisis of debt to continue holding back families from buying homes, starting businesses and making ends meet."

"President Biden is to be commended for his action to ease the student loan burden, which disproportionately harms women and people of color," the California Democrat said. "Energized by our commitment to equity, justice and opportunity, the fight is not over."

Learn more: Student Loan Forgiveness Updates and FAQs: Who Qualifies and How To Apply

The ruling hit borrowers with a double whammy as the pandemic pause on federal student loans, which was extended eight times, will finally expire in September. The Department of Education had previously stated that if the Court rules against Biden's plans, student loans will resume accumulating interest in September and that payments will have to start up again in October.

Justice Amy Coney Barrett, while agreeing with the majority opinion in full, delivered her own concurring opinion, writing that the Court did not need to use the "major questions doctrine" to come to its decision.

The decision on student debt has been viewed as the first "major questions doctrine" case since last year's landmark ruling in West Virginia v. Environmental Protection Agency that limited the scope of the EPA's authority. The major questions doctrine holds that agencies require a "clear statement" of authorization from Congress when wielding "unheralded" use of its authority in "extraordinary cases" of "political and economic significance."

Barrett said while the doctrine plays "an important role," it "should not be taken for more than it is—the familiar principle that we do not interpret a statute for all it is worth when a reasonable person would not read it that way."

The Court's liberal justices also criticized the majority's use of the doctrine.

Justice Elena Kagan wrote in the dissent, "The opinion ends by applying the Court's made-up major-questions doctrine to jettison the Secretary's loan forgiveness plan. Small wonder the majority invokes the doctrine."

She continued: "The question, the majority maintains, is 'who has the authority' to decide whether such a significant action should go forward. The right answer is the political branches: Congress in broadly authorizing loan relief, the Secretary and the President in using that authority to implement the forgiveness plan. The majority instead says that it is theirs to decide."

During oral arguments, the Court's conservative justices suggested that they'd rule against Biden's plan, raising questions about the impact and cost of the program as reasons why there should have been congressional approval, while the liberal justices expressed concerns about the realities of borrowers if relief wasn't granted.

"Even though the statutory authority is fairly straightforward, the court seemed fixated on the notion that, notwithstanding the language of the statute that seems to provide the president this authority, the court should not read the statute to grant the president such broad authority," constitutional law expert Kent Greenfield told Newsweek.

Greenfield said while conservative judges have long been viewed as textualists, the ruling on student debt signals a shift on the bench.

"For a few decades, the conservatives have been focused on the textual interpretation. Now, the conservatives want to add extra-textual limits on the text," he said. "The statute allows the president to make all kinds of modifications in the event of a national emergency. But the court will disregard or set aside the language if it appears to give the president too much power."

Education Department officials have warned that resuming student loans could trigger a historic rise in delinquencies and defaults.

"In the past, borrower default rates increased an average of twentyfold following natural disasters despite the Department's grant of administrative forbearances to affected borrowers," Education Department Undersecretary James Kvaal wrote in a November court filing. "We also know that vulnerable borrowers who needed to spend a longer time in an administrative forbearance following a major disaster were more likely to default on their federal student loans after leaving forbearance."

"Unless the Department is allowed to provide debt relief, we anticipate there could be an historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic," Kvaal cautioned.

Update 6/30/23, 3:03 p.m. ET: This article was updated with a comment from Pelosi.