The consequences of the Supreme Court killing student loan forgiveness: report
The United States Supreme Court is scheduled to hear oral arguments on February 28th in two cases challenging President Joe Biden's student loan forgiveness initiatives, which were swiftly condemned by Republicans and right-wing organizations after they were unveiled in 2022.
Lawsuits were filed by six GOP-controlled states aiming to shutter the programs, maintaining that Biden lacks the constitutional authority to eliminate borrowers' debts and that doing so would be unfair to those who paid theirs back.
Harvard University Constitutional Law Professor Laurence Tribe said in December that the Supreme Court's right-wing supermajority will "likely dismantle it." The proposals are currently on hold pending appeals.
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But what happens if Tribe's prediction comes to fruition? On Sunday, CNBC personal finance reporter Annie Nova identified three major consequences that would ensue should the Supreme Court strike down Biden's executive orders, based on analysis by experts.
The first, according to Nova's research, is a "'historically large' hike in delinquencies and defaults," stemming primarily from the COVID-19 pandemic forbearances that paused loan payments.
Second, Nova believes that the political fallout for Democrats and Biden – who campaigned for the White House on this very issue. Nova noted that Biden's last resort may be invoking the Heroes Act of 2003 to indefinitely suspend collections.
Third, Nova adds, is the disproportionately negative impact that reinstating payments would have on Black Americans.
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"Black student loan borrowers owe $7,400 more, on average, at graduation than their white peers, a Brookings Institution report found," Nova wrote. "That inequity only gets worse with time: Black college students owe, on average, more than $52,000 four years after graduation, compared with around $28,000 for the average white graduate."
Wisdom Cole, the national director of the youth and college division at the NAACP, warned that "the racial wealth gap will widen, and the vicious cycle of economic inequality will continue. If our leaders truly believe that Black lives matter, they should understand that failure is not an option."
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Nova's full report is available here.
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