As the Supreme Court heard arguments on President Joe Biden’s student debt relief plan Tuesday, Justice Neil Gorsuch questioned its fairness.
Gorsuch was asking on behalf of those who have already paid off their student loans or had no loans They would not benefit from the president’s plan to cancel $10,000 in federal student debt and up to $20,000 for low-income students who received Pell Grants.
The question is a natural one, but not the right one.
For the justices, that question is Is it legal?
Former California Rep. George Miller, who wrote the 2003 law empowering the secretary of education to forgive debts in a national crisis, says the secretary is acting as Congress intended. Many legal experts agree, but they also expect that the court’s conservative majority is likely to block the cancellation of $400 billion in student debt as executive overreach.
That outcome would truly not be fair – not to the borrowers and not to the nation. Opponents of debt relief say it’s about defending responsibility, but what it amounts to is a callousness that holds back the ability of young people to contribute to their own and the nation’s welfare.
Students who take loans to pay for college do so out of a belief that the cost eventually will pay for itself through higher lifetime earnings. But as the cost of college has soared – tripling since 1980 – the debt taken on has hindered millions of Americans from getting ahead.
Students who took loans to attend a four-year college now typically graduate with an average of $25,000 in debt. In North Carolina, 55 percent of college graduates had student loan debt in 2019-20 and the average owed was $29,681, according to the Institute for College Access and Success. Overall, 45 million borrowers owe a total of $1.6 trillion, according to the White House.
Student loan debt and its accumulating interest is difficult to discharge through bankruptcy. For many, it becomes unpayable and inescapable. A 2022 Pew survey found that prior to the pandemic-related suspension of student debt payments, about a third of federal student loan borrowers between 1998 and 2018 defaulted on their loans by going more than 270 days without making a payment. Overall, $124.4 billion in student debt is in defaulted student loans.
The debt burden falls heaviest on the lowest-income borrowers, but it weighs on almost all who have it. Some have defaulted and damaged their credit. Others don’t have enough after paying their loans to afford paying for a car or a home. College loan debt has stymied the ability of millions to afford health care or save for retirement.
This debt isn’t only a problem for borrowers; it’s a drag on the economy and a drain on the nation’s potential.
The Biden debt cancellation plan isn’t a total forgiveness plan. The amounts canceled are capped and eligibility is limited to individuals with incomes less than $125,000 ($250,000 for married couples). Ninety percent of the relief would be to those earning less than $75,000 a year.
In North Carolina, the News & Observer reported that 1,190,500 borrowers are eligible for the debt cancellation and 785,000 of them are eligible for up to $20k because they received Pell Grants.
The Biden plan isn’t perfect. Some progressives think it does not forgive enough. Conservatives want every penny paid. An NPR/Ipsos poll found that a slight majority of the general public supports forgiving up to $10,000 in federal student loan debt.
The federal government and higher education institutions must find ways to bring down the cost of college. But in the interim, this plan has the appeal of partially relieving a burden that is stunting a generation of younger Americans. And easing that burden would benefit all Americans by improving the economy and putting less pressure on safety net programs.
The Supreme Court should let the debt relief plan do what the law says can be done. If the law is too broad, let Congress narrow it.
That would be the fair thing to do.
