June 30, 2023 SCOTUS blocks Biden's student loan plan and limits LGBTQ protections

In a stinging defeat for President Joe Biden, the Supreme Court blocked the administration’s student loan forgiveness plan Friday, rejecting a program aimed at delivering up to $20,000 of relief to millions of borrowers struggling with outstanding debt.

The decision was 6-3 with Chief Justice John Roberts writing for the conservative supermajority.

Roberts said the government needed direct authorization from Congress. “The question here is not whether something should be done; it is who has the authority to do it.”

The liberal dissenters said the majority is basically making political decisions.

It will immediately become a potent issue in the 2024 presidential race, as Biden can try to galvanize liberals by claiming the conservative court prevented him from delivering debt relief to voters. Republicans, meanwhile, are celebrating the ruling as a defeat for a “bailout” plan.

Here's what you need to know:

New proposed plan: In response to the court's ruling, the president announced that his administration will pursue another pathway to providing some student debt relief, which is based on a different law than the one the now-defunct student loan forgiveness program was linked to. This new pathway requires the Department of Education to undertake a formal rule-making process, which typically takes months. Details were not released Friday on who might benefit if that process is successful. The president also announced that the administration will take steps to ease the transition period for borrowers when monthly student loan repayments resume in October.

Loan forgiveness: The administration has made it easier for many borrowers to seek federal student loan forgiveness from several existing debt cancellation programs. New rules set to take effect in July could broaden eligibility for the Public Service Loan Forgiveness program, which is aimed at helping government and nonprofit workers. And a new income-driven repayment plan proposal is meant to lower eligible borrowers’ monthly payments and reduce the amount they pay back over time.

Pause on payments to end: Most student loan borrowers have not been required to make payments on their federal student loans since March 2020, when Congress passed a sweeping aid program to help people struggling financially because of the Covid-19 pandemic. Since then, the pause has been extended eight times – under both the Trump and Biden administrations. A law passed in early June that addresses the debt ceiling prohibits another extension of the pause.

What borrowers should do: Student loan experts recommend that borrowers reach out to their student loan servicer with any questions about their loans as soon as possible. After such a long pause, many borrowers may be confused about how much they owe, when to pay and how. Millions of borrowers will have a different servicer handling their student loans since the last time they made a payment.

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CNN's Ariane de Vogue, Tierney Sneed and Katie Lobosco contributed to this report

The Supreme Court’s decision in favor of a Christian web designer in Colorado who refuses to create websites to celebrate same-sex weddings out of religious objections will have a far-reaching impact on other minority groups and could open the door to a slew of cases seeking to further chip away at civil rights protections in the US.

In a 6-3 opinion delivered Friday by Justice Neil Gorsuch that was joined by the court’s five other conservatives, the justices said that the First Amendment’s free speech protections permitted the web designer, Lorie Smith, to refuse to extend her services for same-sex weddings.

The ruling was rooted in free speech grounds and could create a massive hole in state public accommodation laws for businesses that sell so-called “expressive” goods, allowing for companies that provide customized, expressive products and services to pick and choose who they work with.

Legal experts told CNN that the conservative majority’s decision is likely to cause confusion about which businesses fit into the description provided by the opinion, and they stressed that members of the LGBTQ community are not the only ones impacted by the ruling.

The experts also warned that the decision in 303 Creative v. Elenis is just the opening chapter in what will likely be years of litigation from people looking to push the limits around state and local laws providing civil rights protections for various minority groups.

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The Colorado web designer who wanted to refuse LGBTQ customers and just won her case at the Supreme Court claimed in court filings that a man inquired about her services for his same-sex wedding.

But the man says he never reached out to Lorie Smith, the web designer who argued at the Supreme Court that she shouldn’t be forced to create same-sex wedding websites because of her religious objections. In fact, the man says he’s straight and married to a woman. 

The man was identified as “Stewart” in court filings and described as someone who requested graphic designs for invitations and other materials for a same-sex wedding with his fiancé, Mike.

CNN contacted Stewart through information in court filings. He asked for his last name, which is not in the filing, not to be used.

In his interview with CNN, Stewart said he “did not submit a request” to the company, 303 Creative, and is a “happily married man to a woman of 15 years.”

Stewart, who previously worked for CNN, said he is a web designer himself, and that “it would make zero sense to hire a web designer when I can do that for myself.”

Stewart said he was unaware of his information being a part of the court record until he was contacted by media outlet The New Republic on Wednesday.

CNN reached out to Smith for comment. Kellie Fiedorek, a senior counsel at Alliance Defending Freedom, which represented Smith, said in a statement that Smith “doesn’t do background checks on incoming requests to determine if the person submitting is genuine.”

“Whether Lorie received a legitimate request or whether someone lied to her is irrelevant,” Fiedorek said. “No one should have to wait to be punished by the government to challenge an unjust law.”

“Moreover, Lorie has received other wedding requests and has been unable to respond to any request because that put her at risk of punishment for violating Colorado's unjust law,” Fiedorek said, referring to an anti-discrimination law in the state. 

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President Joe Biden's next attempt at providing student loan relief to as many Americans as possible will take longer than his original plan, which was doomed Friday by a Supreme Court ruling. That's because of the laws underlying the two approaches.

The White House had sought to use the Higher Education Relief Opportunities for Students Act of 2003, known as the HEROES Act, to waive debt for millions of borrowers.

The HEROES Act, which was passed in the wake of September 11, 2001, grants the secretary of education the power to “waive or modify” a federal student loan program in order to ensure that individuals “are not placed in a worse position financially” because of “a war or other military operation or national emergency.”

The Biden administration had presented the Covid-19 pandemic and the resulting economic downturn as the basis for emergency relief.

Biden said Friday that his new plan is legally sound and consistent with Friday's ruling because it will rely, instead, on the Higher Education Act of 1965 — a path progressives have previously encouraged his administration to take.

But, critically, this route will require the administration to follow the full regulatory rule-making process (something it avoided with HEROES). That includes time to post the new proposal, allow for public comment, consideration of that comment, multiple meetings and other bureaucratic steps.

There is no concrete timeline for how long that process may take, and details were not released Friday on who might benefit if it is successful.

Ultimately, it's unclear whether this new approach could have the same breadth and scope as the original plan — but it definitely means a delay in relief.

CNN's Kyle Feldscher and Katie Lobosco contributed to this report.

Millions of Americans have student loan debt, amassing to more than $1.6 trillion by the end of last year, according to the Federal Reserve Bank of New York.

The Federal Reserve data shows people under the age of 30 are more likely to have student loan debt compared with older adults — underscoring the crippling burden on another generation of Americans.

But the impact is multigenerational. Nearly a quarter of the outstanding student loan debt is owed by Americans who are 50 and older.

Student debt has not always been a crisis. The modern federal education borrowing system came from a series of legislative moves aimed at helping more people have access to college — but it came with some unintended consequences.

Here are some of the key moments:

1958: The first federal initiative 

The National Student Loan program, aimed at expanding access to higher education, was launched in 1958. Created from the National Defense Education Act, it was the first federal student loan initiative for those studying certain subjects to improve science, mathematics and engineering skills during the Cold War.

1965: The Higher Education Act

The Higher Education Act of 1965 opened the possibility of college to even more people, regardless of area of study — but it also created a new type of relationship between the federal government, banks and college campuses through the Guaranteed Student Loan program.

It solved for the government the challenge of how to get lenders involved with such a risky financial investment: The loan did not come from the federal government, but instead, the government assured repayment to bankers willing to give loans, Shermer said.

1970: Sallie Mae and a boom in borrowing and private loans

The Student Loan Marketing Association, known as Sallie Mae, was created through the reauthorization of the Higher Education Act in 1972. Sallie Mae offered private student loans along with other financial products.

The availability of financial aid products to both for-profit and nonprofit companies allowed for the rise of private student loans, she said.

That coupled with the rising cost of tuition in the 1970s meant that students needed more money to continue their education. Since there was a limit to how much students could borrow in federal loans, private loans were needed as a supplement.

Another reason why private loans became more critical was pressure in Washington for Congress to cut taxes and cut spending, she said.

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Vice President Kamala Harris slammed the Supreme Court ruling in favor of a Christian web designer in Colorado who refuses for religious reasons to create websites to celebrate same-sex weddings.

“This decision threatens future progress,” she added.

Harris vowed that she alongside President Joe Biden, “will continue to rigorously enforce federal anti-discrimination protections and fight for the right of all people to participate equally in our society.”

Harris urged Congress to pass the Equality Act, an amendment to the Civil Rights Act of 1964 which passed through the House but failed in the Senate.

President Joe Biden says his administration is laying out a new path for student loan debt relief which will help as many Americans as possible but will "take longer" to implement than his original forgiveness program, which was blocked by a Supreme Court decision today.

Biden made the announcement as he delivered remarks at the White House on Friday.

He said the steps include a new path toward providing student debt relief "to as many borrowers as possible, as quickly as possible." Biden said the approach will be consistent with today's ruling because it will rely on a different law, the Higher Education Act of 1965.

It will allow Education Secretary Miguel Cardona, who stood alongside Biden, to "compromise, waive or release loans under certain circumstances," the president said.

A long road ahead: Biden said his new path is legally sound, and the best option for his administration. He said his team will move as quickly as possible to put it into place.

Key context: Progressive lawmakers have in the past pushed Biden to use the Higher Education Act as an avenue for student loan forgiveness, but it's unclear whether this new approach could have the same breadth and scope as the current plan.

"On-ramp" for resuming payments: Biden said his administration will also create a temporary 12-month "on-ramp repayment program," aimed at helping borrowers who will need to make difficult decisions when payments resume in October.

Rather than letting people slide into deeper financial trouble when they miss payments on the front end, Biden said the on-ramp will temporarily remove the threat of default or having a borrower's credit damaged for years to come.

"This is not the same as the student loan pause," Biden said. "Monthly payments will be due," bills will go out and interest will start accruing.

"If you can pay your monthly bills, you should," the president continued. But if you can't, the on-ramp will help prevent financial ruin.

The Department of Education won't refer borrowers with missed payments to credit agencies for 12 months "to give them a chance to get back up and running," Biden said.

The president also announced that his administration will reduce the level of income-driven repayments from 10% to 5% of a borrower's disposable income. (Through this program, borrowers pay a fixed rate determined by their income for a set period of time, and are forgiven any remaining balance at the end of that period.)

CNN's Sam Fossum contributed to this report.

Arkansas Attorney General Tim Griffin said the Supreme Court was correct in its ruling to block President Joe Biden's student loan forgiveness program, arguing that it is not legal under the HEROES Act.

"I personally had over $100,000 in my own student loans, and I just finished paying them off in my 40s, after years. So I understand this intimately. This for me is not about policy. This is not a discussion of whether we should or should not forgive loans. That's where people get confused. This is about the law," he said on CNN.

"The simple question was not 'Should we forgive the loans?' The simple question was and continues to be: Does the president have the unilateral authority under the HEROES Act to forgive the student debt? That's the question that was presented. And that's the question that we got an answer to," he said.

Arkansas is one of six plaintiff states the Supreme Court ruled in favor of in this ruling.

About the HEROES Act: The Higher Education Relief Opportunities for Students Act of 2003, known as the HEROES Act, was passed in the wake of the September 11, 2001, terrorist attacks and granted the secretary of education the power to “waive or modify” a federal student loan program in order to ensure that individuals “are not placed in a worse position financially” because of “a war or other military operation or national emergency.”

Lawyers for the Biden administration argued that this provision gives the secretary of education the authority to cancel federal student loan debt so that borrowers are not made worse off with respect to their loans by the effects of the Covid-19 pandemic.

Possible impact on other programs: Griffin was also asked if other programs — such as Medicare and Social Security — could be affected by the precedent set in this ruling.

He said there are lawsuits against the administration related to executive orders and some regulations with different agencies, but he did not elaborate further.

"This does continue to draw a clear line reining in the administrative state ... (which has been) way out of control for a long time, and they've been acting in an extraconstitutional way. And look, the stuff they do can be done, but it must be done by the elected officials in the United States Congress," he said.

CNN's Katie Lobosco contributed reporting to this post.

President Joe Biden said he didn't give student loan borrowers "false hope" with his forgiveness program that was blocked by the Supreme Court on Friday.

He said he believes the Supreme Court “misinterpreted the Constitution" with its monumental ruling.

The forgiveness program, estimated to cost $400 billion, would have fulfilled a campaign promise of Biden’s to cancel some student loan debt. 

Under the president's student loan forgiveness proposal, individual borrowers who made less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 a year would have seen up to $20,000 of their federal student loan debt forgiven.