The Supreme Court has struck down President Joe Biden’s $400 billion student loans forgiveness plan in another bombshell decision.
The court ruled against Biden’s controversial plan to wipe out debts for around 20 million Americans, which the 8th U.S. Circuit Court of Appeals blocked in October.
The landmark ruling on the final day of the Supreme Court’s term comes 24 hours after the justices decided colleges could no longer use race as a consideration in admissions in a case that sparked backlash from Biden.
The plan would have eradicated $10,000 in debt for borrowers earning less than $125,000 and up to $20,000 for those with Pell Grants.
But it was challenged by six Republican states and two borrowers who argued Biden should have sought approval from Congress for a plan using substantial taxpayer funds.
Millions of Americans haven’t had to repay their loans for three-and-a-half years because of a COVID pandemic freeze. Borrowers will have to restart their payments in October, and interest will start recurring in September.
Biden’s loan forgiveness has been a cornerstone of his presidency, and the ruling will be a massive blow to the administration that has fought against the piling debt.
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For months, Biden’s student loan blueprint has been at the centre of a legal tussle with six Republican-controlled US states and two borrowers.
Iowa, Arkansas, Kansas, Missouri, Nebraska and South Carolina said he had no legal authority to go ahead with the plan without the sign-off from Congress first.
Biden used the post-9/11 HEROES Act as justification for the programme. It stipulates the Department of Education can waive student debt during a national emergency.
The COVID national emergency in the eyes of the government came to an end in May.
The programme has been on hold since November after a federal appeals court in St. Louis issued an injunction, pausing applications and payouts.
That forced the U.S. government to seek the intervention of the Supreme Court justices.
The six conservative justices expressed their skepticism of the plan during oral arguments in February, and gave an early indication of their decision.
Announced last August, the administration vowed to cancel some $10,000 in federal student debt for students earning less than $125,000.
Officials also promised to axe an additional $10,000 for students who received what are known as Pell Grants.
These financial aid payments are awarded to students with exceptional financial needs.
But most Republicans say those who took out loans need to repay them without a bailout.
They have also argued that taxes paid by Americans who didn’t attend college shouldn’t be used to fund those who did.
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