The US Supreme Court has struck down US President Joe Biden’s proposal to wipe out billions in student debt.
The 6-3 ruling effectively cancels the plan, which would have forgiven about $10,000 (£7,800) per borrower – and up to $20,000 in some cases.
But the plan has been in limbo since some conservative states sued, arguing the president overstepped his authority. The Supreme Court agreed.
The decision affects the loans of more than 40 million Americans.
In the wake of the decision, US media reported that President Biden is expected to announce new actions to protect borrowers later on Friday. In a statement, Mr Biden said that “the fight is not over” and that he believed that the ruling was “wrong”.
The total federal student debt has more than tripled over the past 15 years, rising from about $500bn in 2007 to $1.6tn today.
Last year, the US Treasury took a $430bn charge to cover $300m in costs associated with the loan forgiveness programme, as well as additional costs associated with an extension of a Covid-era moratorium on payments through the end of the year.
The Biden administration faced plaintiffs in two separate cases, one involving six Republican-led states – Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina – and the other involving two individual student loan borrowers.
In both cases, plaintiffs argued the executive branch did not have the power to so broadly cancel student debt.
The Supreme Court ruled the two individual borrowers did not persuasively argue they would be harmed by the loan forgiveness plan, effectively ruling that they had no legal standing to challenge the Biden administration’s proposal.
