Borrowers disappointed with Supreme Court ruling striking down student loan relief

Out of cellphone range and running low on hope, Annie Quinn kept refreshing her phone while traveling through rural Maryland on Friday, bracing for what nine U.S. Supreme Court justices would decide about her financial future.

The news, as she feared, wasn’t good.

When her phone signal returned, Quinn, 38, of Pittsburgh’s Greenfield, learned the Supreme Court had struck down President Biden’s student loan forgiveness program. That means tens of millions of college students will not have $10,000 or more in campus debt wiped away.

Quinn said she had gotten so close to the finish line, working since 2007 to pay off $120,000 in debt from her time as an undergraduate at American University in Washington, D.C., where she earned bachelor’s degrees in political science and environmental science.

As of Friday, her remaining balance stood at $9,725 — an amount that would have been swept clean by Biden’s plan.

“I can’t even describe it. Just panic,” she said of her emotions as she absorbed the news. “I would have finally been free. Now, I’ll be paying this off into my 40s.”

She spoke from a gas station in Cumberland, Md., as her husband, 13-year-old son and 9-year-old daughter headed for vacation in a sport utility vehicle “packed to the gills with camping gear.”

Feeling suddenly guilty about their summer vacation to Shenandoah National Park, a renegade thought flashed through Quinn’s mind with her contemplating whether she would continue to pay, given all she had done already to pay off her debt — including graduating early and working multiple jobs at nonprofits.

“I’m done. Come get me,” she said she thought.

But then she looked at her children and thought about the consequences of defaulting on a loan.

Friday’s 6-3 decision by the Supreme Court comes as a pause on student loan repayments that was imposed during the pandemic is set to end on Sept. 1.

In its ruling, the court held that the administration needed Congress’ endorsement before undertaking so costly a program. The majority rejected arguments that a bipartisan 2003 law dealing with national emergencies, known as the HEROES Act, gave Biden the power he claimed.

The court’s decision drew immediate reaction from the Debt Collective, a debtors’ union pushing for debt abolition.

“The Supreme Court does not have the last rule on justice,” the Debt Collective said in an email. “The power to cancel student debt lies with the president, not with the Supreme Court. The President has many other legal tools at his disposal to cancel debt. The question right now is, how fast is the president willing to act?”

Biden’s debt forgiveness plan was introduced last August with the goal of offering different levels of student loan relief based on income and need.

For people making less than $125,000 or households bringing in under $250,000, the relief would total $10,000. The relief would be up to $20,000 for Pell Grant recipients.

More than 43 million Americans were eligible for some form of debt relief under Biden’s plan, and the Biden administration had estimated that about half that number would have their debt wiped away completely.

McKenzie Algaier, 24, of Sharon, got the news that her $12,000 balance, much of which would have been forgiven, was now her responsibility again.

“I was really unsurprised, actually,” she said Friday after learning of the Supreme Court ruling. “It was too good to be true.”

Algaier graduated from Mt. Lebanon High School in 2017. She attended CCAC for two years and then transferred to the University of Pittsburgh to work toward a political science degree with a focus on gender studies.

“I was working full-time waitressing and in child care,” she said.

After graduating from high school, she said, “I was hoping to work with non-governmental agencies to support women and children of domestic abuse.”

But after the pandemic drove university instruction online, Algaier said it became more difficult to keep up with her studies and work and she eventually left campus without graduating.

Ever since, she has worked jobs ranging from teaching children in-home to work at a plant shop in Shadyside and a fitness studio in Sharon.

She plans to return to college at Blanquerna University in Barcelona, Spain, to add an international studies focus.

But in the meantime, she faces debt and work options that are not sustainable long-term.

How much does she make? “Not enough,” she said. “Let’s put it that way.”

She added, “It’s exhausting.”

The Biden administration has estimated that about 26 million people had applied for forgiveness, and 16 million people had their relief approved.

Among student borrowers in Pennsylvania, the stakes are especially high since this state has the third-highest debt levels in the nation.

About 64% of students leave campus with debt averaging $39,375, behind only $39,928 in New Hampshire and $29,705 in Delaware, according to the most recent survey by the Institute for College Access and Success.

The Supreme Court ruling striking down loan forgiveness combined with the Sept. 1 end of the pandemic-inspired pause on student loan interest could be a double blow to those most vulnerable financially.

The Financial Health Network estimated that 12.5 million borrowers anticipate they will have trouble making monthly payments.

Friday’s ruling “is a devastating blow to student borrowers,” though Biden’s program alone would not have solved broader problems facing the loan system, said Jamie Kosh, president of the Pennsylvania Association of Student Financial Aid Administrators.

His group and others are telling students to act early to restart payments to avoid a last-minute crush as September approaches. He suggested using the U.S. Department of Education’s website as a resource: https://studentaid.gov/.

“These are unprecedented times. We’ve never had a situation where 40 million people have to take an action to resume payment of their student loans,” said Bob Collins, vice president of financial aid with Western Governors University, a nonprofit, private online university founded by 19 western governors near Salt Lake City, Utah.

About 16 million borrowers have had their loan servicer change since the pandemic and loan pause, said Nate Blanchard the university’s director of financial services.