What the Supreme Court’s student loan decision means for New Yorkers

The Supreme Court’s ruling that President Biden cannot cancel $400 billion in federal student loan debt could leave a particular mark on New York, where per capita student loan debt is higher than the U.S. average.

The White House had planned to end a long-running, COVID-created pause on student loan debt repayment by wiping out up to $20,000 in student loans for low-income Americans and up to $10,000 for individual earners making less than $125,000 a year.

Now, the pause is set to end this summer without Biden’s program taking effect.

An estimated 2.4 million New Yorkers with student loan debts would have been eligible for the relief program, according to data from the federal Education Department.

Student loan debt hits hard in New York. The state’s per capita student loan balance was about $6,200 in 2021, the 11th-highest rate in the nation, according to a report by the state comptroller’s office.

In its bid to brush away chunks of student loan debt for more than 40 million Americans, the White House had invoked a 2003 law called the HEROES Act, which allows the Education Department to waive or tweak financial aid programs in times of national emergency.

The Biden administration argued that COVID posed such an emergency. But the Supreme Court, which has a 6-to-3 conservative supermajority, frowned on the White House’s argument, finding that the administration sought to exceed its executive authority and reach beyond the text of the HEROES Act.

The pause is set to end Sept. 1, with payments resuming Oct. 1, according to the federal Education Department.

Biden said his administration would grant borrowers a year-long “on-ramp” sparing them from default if they miss a payment.

[ Supreme Court rejects President Biden’s student loan relief plan ]

He also promised to pursue a new student debt relief plan, rooted in the Higher Education Act of 1965. The process is expected to move slowly.

“This is an approach that is less likely to face legal pushback,” said Katharine Meyer, a fellow at the Brown Center on Education Policy at the Brookings Institution.