Sweeping student loan forgiveness not allowed, Supreme Court rules

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A sweeping plan to forgive student loan debt is off the table for now, according to a ruling by the U.S. Supreme Court.

In a 6-3 ruling, the High Court on June 30 sustained challenges to President Joe Biden’s plan to discharge up to $20,000 in student debt for those making less than $125,000 a year in 2020 or 2021. That action would have canceled about $430 billion in debt for 43 million borrowers.

Six states sued, arguing the federal Higher Education Relief Opportunities for Students (HEROES) Act of 2003 “does not authorize the loan cancellation plan. We agree," said the ruling by Chief Justice John G. Roberts Jr. He was joined by Justices Clarence Thomas, Samuel A. Alito Jr., Amy Coney Barrett, Neil M. Gorsuch, and Brett M. Kavanaugh.

It was unclear exactly what the effect would be for resident and fellow physicians.

In August last year, the American Medical Association (AMA) noted “physicians in every specialty earn well over the $125,000 per year individual income threshold.” But some physicians with a spouse earning little or now income might qualify for up to $10,000 in loan forgiveness.

Citing a report by the Association of American Medical Colleges (AAMC), AMA said some residents and fellows would qualify based on salary levels, “but it might not make a sizable dent for many borrowers,” an AMA analysis said.

Median debt for physician graduates is about $200,000, AMA said, citing the AAMC figures. “Reducing physician indebtedness could help promote diversity within medicine and contribute to a reduction in the shortage of physicians,” the AMA analysis said.

AAMC generally praised the plan.

Pandemic financial burdens

The financial hardships of the COVID-19 pandemic prompted a number of federal measures to bolster the economy, including the loan forgiveness program through the U.S. Department of Education. Anyone earning less than $125,000 in 2020 or 2021 would have up to $10,000 forgiven, and those who received Pell Grants would qualify for up to $20,000 in debt forgiveness.

The Supreme Court majority ruled the program would harm the state of Missouri through that state’s Missouri Higher Education Loan Authority (MOHELA), a public corporation that holds and services student loans.

Based on the HEROES Act, federal law allows the U.S. Department of Education secretary “to make modest adjustments and additions to existing provisions, not transform them,” the majority ruling said. Those changes were “minor and had limited effect” before the COVID-19 pandemic, but the law “does not allow the Secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal,” the ruling said.

Additional opinions

In a concurring opinion, Barrett examined the “major questions doctrine” and consideration of context of the law.

In the dissenting opinion, Justice Elana Kagan said two different U.S. Department of Education secretaries under two different presidents used their legal authority first to suspend student loan payments, then to cancel the debt. She argued the Supreme Court overreached in its ruling because the six states that challenged the debt forgiveness had no personal stake or injury by the federal policy to wipe out the student loan debt. An injury in fact is required under the Constitution for a plaintiff to have standing to challenge a government action, the dissenting opinion said.

The six states “are classic ideological plaintiffs: They think the plan a very bad idea, but they are no worse off because the Secretary differs. In giving those States a forum – in adjudicating their complaint – the Court forgets its proper role. The Court acts as though it is an arbiter of political and policy disputes, rather than of cases and controversies.”

Kagan was joined by Justices Sonia Sotomayor and Ketanji Brown Jackson.

Down with diversity

Meanwhile, AMA and AAMC blasted a U.S. Supreme Court ruling from the day before that dumped race as an admission criterion used by Harvard University and the University of North Carolina.

The schools’ admission programs “lack sufficiently focused and measurable objectives warranting the use of race, unavoidably employ race in a negative manner, involve racial stereotyping, and lack meaningful end points,” which cannot be reconciled with guarantees of the Equal Protection Clause of the U.S. Constitution, the Supreme Court ruling said.

“Many universities have for too long wrongly concluded that the touchstone of an individual’s identity is not challenges bested, skills built, or lessons learned, but the color of their skin. This nation’s constitutional history does not tolerate that choice,” the majority ruling said.

AMA and AAMC ripped the ruling for its potential to stifle diversity in the physician workforce, which in turn will perpetuate racially based inequities in health care at large.

“Recently established AMA policy reinforces our stance that medical schools must continue to make progress toward enrolling talented and highly qualified medical students in racial and ethnic groups that have been traditionally underrepresented in medicine,” an AMA statement said. Eliminating health inequity requires more commitment to, investment in and support for Black, Latinx and Native American and Indigenous communities, and LGBTQ+ people. Yet, (the Supreme Court) ruling undermines policy that was producing positive results and improving the health of our patients, as well as making all physicians better practitioners. This ruling is bad for health care, bad for medicine, and undermines the health of our nation.”

AAMC said the ruling “demonstrates a lack of understanding of the critical benefits of racial and ethnic diversity in educational settings and a failure to recognize the urgent need to address health inequities in our country.”

“The AAMC, informed by decades of research, recognizes the undeniable benefits of diversity for improving the health of people everywhere,” the AAMC statement said. “We remain committed to enhancing health professional education and practice by emphasizing critical thinking, innovation, effective communication with all patients, and increased access to patient care for an increasingly diverse population.