Student loan ruling denies relief to 730,000 Minnesota borrowers

A person wearing a graduation cap and gown while walking on campus.
Graduates walk with their families near Atwood Memorial Center during St. Cloud State University spring semester commencement ceremonies on Aug. 14 in St. Cloud, Minn.
Dave Schwarz | The St. Cloud Times via AP 2020

The U.S. Supreme Court’s decision Friday striking down President Joe Biden’s student debt forgiveness program means that hundreds of thousands of Minnesotans will not get the financial relief that many had hoped for. The high court ruled 6-3 that the U.S. Department of Education does not have the authority to cancel federal student loans.

Of the 767,000 Minnesotans who have student loan debt, the Minnesota Office of Higher Education estimates 730,000 would have been eligible for the program. Depending on the borrower’s eligibility, Minnesotans would have seen up to $20,000 of debt relief.

Mankato resident Jeremiah Lemon might have been eligible if the program had come to fruition. A decade ago, Lemon borrowed $21,000 to pay his tuition at a private, for-profit college. He still owes around $18,000. Lemon, 28, said he always assumed that he’d be on the hook for all of it and the high court’s decision simply maintains the status quo.

“Student loans are a massive issue, but if there was no plan to eliminate it, nobody would be upset,” he said. “Everybody’s life would be just the same as it was a year ago.”

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Lemon admits that when he graduated from high school, he didn’t understand the ramifications of taking on that much debt. And even though he would have benefited from President Biden’s loan forgiveness plan, Lemon did not support it. 

“You’re incentivizing bad decision making is what it comes down to. You’re saying you can make bad decisions with your money and that’s just not the case,” he said.

Lemon is back in school, this time at Minnesota State University, Mankato, where he’s working on a bachelor's degree in social studies education. He said he’s learned his lesson with debt and didn’t take out any more loans. 

Lemon and other Minnesotans together owe more than $25 billion in federal student loans.

University of Minnesota student Alexander Wimmer, 20, owes about $15,000 and said he’s disappointed he won’t see any of that debt forgiven. With the pandemic-era pause in payments coming to an end in three months, Wimmer said a new financial reality will add stress to his senior year.

“I didn't make plans to spend all my money now in the hopes of that, but it was more so like hoping that you wouldn't have to tighten the budget so much,” Wimmer said. “Students and people who've just graduated aren't like exactly flush with cash.”

The Supreme Court's decision provoked outrage from Democratic leaders, including U.S. Rep. Ilhan Omar. 

Ilhan Omar
Rep. Ilhan Omar, D-Minn., speaks during a news conference by the Congressional Progressive Caucus on the threat of default, May 24 on Capitol Hill in Washington.
Jacquelyn Martin | AP

“We cannot return to the status quo of mass default and distress,” Omar said in a statement. “Every option needs to be on the table to ensure borrowers are protected from economic ruin by being thrown back into a fundamentally broken student loan system.”

U.S. Rep. Betty McCollum called the decision “extremely disheartening” in a statement and emphasized how many Minnesotans would have benefited from the program.

In a tweet, U.S. Rep. Tom Emmer, a Republican, praised the ruling and said that Biden’s plan “would’ve bailed out the wealthy while forcing taxpayers — including those who didn’t go to college — to foot the bill.”

Minnesota Higher Education Commissioner Dennis Olson said the decision is a blow to hundreds of thousands of Minnesotans. He added that debt forgiveness could have provided a boost to the state’s economy.

“This one is especially difficult because it comes right before repayment for federal student loans resumes on October 1. And unfortunately with this one, this does have a significant impact here in Minnesota,” Olson said.

Minnesota State Colleges and Universities
Alex Friedrich | 2013

Hamline University Political Science Professor and Constitutional Law Expert David Schultz said the decision — while not a surprise — could have longstanding impacts on post-secondary institutions across the nation.

“For many students who maybe are in the middle of college, or thinking about going back to school, they may be thinking, 'Oh, maybe I can't afford to go to college at this point,’” he said.

In this way, he said the decision “adds to the woes” of the many Minnesota colleges that are struggling with declining enrollment and large racial achievement gaps.

Olson urged students to consider state financial aid programs, such as the new North Star Promise Scholarship Program that state lawmakers approved this year. Starting in the fall of 2024, the program covers the balance of tuition and fees after all other scholarships, grants, and other aid have been applied and is available to Minnesotans whose family income is below $80,000. 

Olson also recommends that borrowers keep an eye out for mail from their loan servicers and the U.S. Education Department. With the pandemic-era repayment pause ending soon, he said it’s essential that borrowers reacquaint themselves with the terms of their loans so they don’t fall behind on payments or go into default.