On Friday the US Supreme Court ruled on Biden v. Nebraska, voting 6-3 with conservative justices in the majority effectively killing President Joe Biden’s plan proposed last year to cancel some student loan debt. Repayments are expected to resume by late summer.
In March 2020, at the start of the pandemic, President Donald Trump used the HEROES Act (Health and Economic Recovery Omnibus Emergency Solutions Act) to pause student-loan payments and waive interest. Biden extended that pause, continuing it for three years.
In the decision, Chief Justice John Roberts wrote that outstanding federal student loans totaled $1.6 trillion, extended to 43 million borrowers.
“Last year, the Secretary of Education established the first comprehensive student loan forgiveness program, invoking the (HEROES Act) for authority to do so,” Roberts wrote. “The Secretary’s plan canceled roughly $430 billion of federal student loan balances, completely erasing the debts of 20 million borrowers and lowering the median amount owed by the other 23 million from $29,400 to $13,600. Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree.”
CT Governor Ned Lamont issued a statement Friday afternoon, saying he condemned the Supreme Court for siding against low and middle-income families in need of debt relief and reminded Connecticut employers and residents of the tools made available by his administration and the Connecticut General Assembly to address student loan debt in Connecticut.
“Today’s decision from the U. S. Supreme Court deals a crushing blow to over 200,000 hardworking Connecticut residents who were already approved for this much needed student debt relief,” Governor Lamont said in the statement. “As the land of opportunity, we should be in the business of building ladders, not cutting off lifelines. Although the U.S. Supreme Court has blocked federal assistance, Connecticut offers a generous tax credit to employers that provide student loan assistance and a debt-free community college program that more than 10,000 students have already taken advantage of. We also have targeted relief programs for teachers, nurses, and social workers. I encourage all employers to step up to the plate and take advantage of state incentives to help pay down their employees’ student loans.”
In 2019, Governor Lamont signed Public Act 19-86, which created a new tax credit for Connecticut employers who help pay off their employees’ student loans. The tax credit was expanded in 2022. This public-private effort offered employees much-needed relief while also providing businesses with another tool to recruit a talented workforce.
The Connecticut Higher Education Supplemental Loan Authority (CHESLA) offers competitively priced loans, including refinancing opportunities, to all residents. In addition, the state sponsors loan and tuition support for teachers, nurses, and social workers through career-targeted programs. Teachers working in one of Connecticut’s Alliance District public schools can get help refinancing their private student loan debt through the Alliance District Teacher Loan Subsidy (ADTLS) Program. Aspiring nurses and social workers can receive up to $10,000 in tuition assistance through CT Health Horizons, a three-year higher education program designed to address statewide shortages in nursing and behavioral health providers.
The Pledge to Advance CT, or PACT, Connecticut’s debt-free community program, is available to first-time, degree-seeking, in-state students who enroll full time, make satisfactory academic progress while enrolled, and have completed the Free Application for Federal Student Aid (FAFSA). Thus far, more than 10,000 students have taken advantage of Connecticut’s debt-free community college options.
Connecticut Attorney General William Tong released a statement on Friday following the Supreme Court decision.
“This is horrible news for hundreds of thousands of Connecticut families staring down billions of dollars in student debt. This decision will cause far-reaching economic harm nationwide as millions of borrowers divert their paychecks and savings to loan payments that should have been forgiven,” Attorney General Tong said in a release.
“I continue to believe the Biden Administration was well within its authority to cancel this debt, and acted responsibly to confront the possibility of looming default as the pandemic pause in repayments soon comes to an end,” he added. “The states that torpedoed this relief are going to have to answer to all the families across the country who are thousands of dollars poorer today thanks to their partisan grandstanding.”
After more than three years, a pandemic-era pause on federal student loan payments is set to expire no later than August 30. In 2022, to ensure that borrowers did not face catastrophic defaults at the conclusion of that forbearance, the Biden Administration announced plans to grant up to $10,000 in debt relief for borrowers under certain income thresholds, and up to $20,000 in debt relief to borrowers who met those income thresholds and received a Pell Grant in college.
But six Republican attorneys general challenged the Biden Administration’s authority to execute the plan.
On Friday, the United States Supreme Court upheld their challenge.
Attorney General Tong filed an amicus brief supporting the Biden Administration, arguing that U.S. Secretary of Education Miguel Cardona has the authority under the HEROES Act to provide limited debt cancellation to prevent student loan borrowers from experiencing grave financial hardship as a result of the COVID-19 pandemic.
As of 2022, close to 500,000 Connecticut residents collectively owed $17.5 billion in student loans, with the average borrower owing more than $35,000. Connecticut ranks 25th in the country in average amount owed per borrower.