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Americans owe $1.7 trillion of student loans and the White House had estimated that more than 40 million borrowers would benefit from the initiative. But almost as soon as the Biden administration announced the debt-forgiveness plan last year, opponents looked for ways to challenge it legally. Ultimately, two cases made it to the high court. 

In one case, two student-loan borrowers sued over the debt-relief plan in part because the Department of Education didn’t submit it for public comment. That, they said, resulted in an initiative that arbitrarily left out or limited the amount of relief available to some student loan borrowers, like themselves. The suit filed by the borrowers was backed by the Job Creators Network, a conservative advocacy organization co-founded by Bernard Marcus, the co-founder of Home Depot, who also supported former President Donald Trump. 

Six Republican-led states brought the other case on the basis that canceling debt could harm their state coffers. 

The court considered two issues in these cases. The first is whether the plaintiffs had standing, or the ability to bring a lawsuit because they’ve been directly harmed by the policy. The second is whether the Biden administration overstepped in its executive authority when issuing the policy. In order for the justices to reach the second issue, or the merits of the case, they had to find that the plaintiffs had standing to sue. 

Legal experts, including some who believed the Biden administration didn’t have the authority to authorize the debt-relief plan, were skeptical of the notion that the parties bringing the cases had standing to sue. During oral arguments in February, the court’s three liberal justices also questioned whether the parties who challenged debt forgiveness were actually injured by the policy. 

In addition, one of the members of the court’s conservative wing, Justice Amy Coney Barrett, asked pointed questions about the six states’ argument that they had standing to sue in part because the debt-relief plan would injure the state of Missouri. That claim surrounded the Missouri Higher Education Loan Authority, or MOHELA, a state-affiliated organization that services federal student loans. The states had argued if MOHELA lost accounts due to the debt-relief plan, its revenue would decline and that loss would hurt Missouri because of MOHELA’s ties to the state. 

Despite these questions, Barrett agreed with the court’s five other conservative judges and found that the states have standing to sue. The three liberal justices dissented.

“MOHELA is, by law and function, an instrumentality of Missouri,” Chief Justice John Roberts wrote in the majority opinion. “It was created by the State, is supervised by the State, and serves a public function. The harm to MOHELA in the performance of its public function is necessarily a direct injury to Missouri itself.”

The court’s decision in the states’ suit allowed the justices to get to the merits of the case. The parties challenging the debt-relief plan argued that the Department of Education went beyond the authority Congress delegated it in discharging student debt. Solicitor General Elizabeth Prelogar argued to the justices that in canceling student debt, the Secretary of Education acted “within the heartland” of the authority Congress provided to him under the HEROES Act, a 2003 law that aims to ensure student-loan borrowers aren’t left worse off by a national emergency. 

The court’s conservative majority sided with the states, with a 6-3 decision, striking down the debt-relief plan in its current form. 

“The HEROES Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, but does not allow the Secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal,” Roberts wrote.

In the months leading up to the court’s decision, White House officials said there was no backup plan for if the Supreme Court knocked down the debt-forgiveness initiative. Advocates and activists have said that student-loan repayments shouldn’t resume until the Biden administration fulfills its promise to cancel some student debt.

The bill President Joe Biden signed in June to raise the nation’s debt limit requires that the Department of Education end the pause on federal student loan, interest payments and collections 60 days after June 30, 2023. Interest on federal student loans will resume starting September 1 and payments will start to come due in October, according to the Department’s website.

Advocates and activists have said for years that the Higher Education Act provides the Secretary of Education with the authority to discharge student loans. In ruling that the HEROES Act didn’t authorize the Biden administration’s debt-relief plan, the court left the option open for the Biden administration to create a loan-forgiveness program authorized under the HEA. 

The court’s decision marks the latest development in a more-than-decade-long push to get the government to cancel student debt en masse. The idea, which has its origins in the Occupy Wall Street movement, made it to the presidential campaign stage during the 2020 cycle and was adopted by the White House last year.    

Proponents of student debt cancellation and the Biden administration, have expressed concern that without some kind of relief a large swath of borrowers could slip into delinquency and default with the return of student loan payments later this year.