The recent decision by the US Supreme Court to strike down President Joe Biden’s student debt relief program will result in the clawback of over $300 billion in costs associated with the initiative. This ruling marks a significant reduction in this year’s deficit for the country.
In a 6-3 ruling on Friday, the court determined that Biden’s unilateral decision to offer one-time debt forgiveness of up to $10,000 to $20,000 to couples earning up to $250,000 exceeded his legal authority as president. The court clarified that such relief should only be granted with the consent of Congress.
The debt relief program had faced legal challenges, which ultimately led to the Supreme Court’s decision. As a result, the US Treasury had already accounted for these costs last year, taking a $430 billion charge against the fiscal 2022 budget. This charge also covered the extension of the general COVID-19 moratorium on student loan payments until the end of 2022.
This action effectively limited the reduction in the fiscal 2022 deficit to $1.375 trillion, compared to $2.775 trillion in the previous year. It is important to note that the federal fiscal year ends on September 30.
Had the recognition of these costs not been accounted for in advance, the deficit would have fallen below $1 trillion as COVID relief programs ended and revenues surged.
Requests for comments from spokespersons for the Education and Treasury departments went unanswered at the time of reporting.
With this ruling, it is clear that the Supreme Court remains committed to upholding the balance of power between the executive and legislative branches of government. The decision highlights the need for consensus and cooperation between the president and Congress when enacting significant policy measures.
This setback for the Biden administration underscores the challenges of implementing progressive policy agendas in a divided political landscape. As the US continues to grapple with the issue of student debt, it remains to be seen what alternative approaches will be pursued to address this pressing concern that affects millions of American students and graduates.
