Minnesotans re-evaluate finances after Supreme Court rejects student loan forgiveness plan

Thousands of Minnesotans were reshuffling their finances and re-evaluating their life goals after the U.S. Supreme Court on Friday struck down President Joe Biden's plan to forgive student loan debt for millions of borrowers.

The ruling came as little surprise to people with debt who had been bracing for the court's ruling, and it landed just one day the justices curtailed the consideration of race in college admissions.

The past two days have felt like "whiplash," said Anthony Tabura, 22, who recently graduated from the University of Minnesota with an engineering degree and has about $27,000 in debt.

"It feels weird knowing that the future of education is kind of in the hands of a few people on the Supreme Court, and in a way it kind of makes you feel a little hopeless," said Tabura, who said the decision will likely affect how many roommates he needs to have and when he starts a family.

About 43 million Americans have federal student loans worth a combined $1.6 trillion. That includes more than a half million Minnesotans who applied or were deemed automatically eligible for the Biden administration's forgiveness program, according to data released by the White House earlier this year.

The ruling came just months before payments on student loans are set to resume following a pandemic pause. That temporary reprieve had given many borrowers a glimpse at what life would be like if they had hundreds of extra dollars per month to put toward things like housing, food, cars or savings.

Biden, a Democrat, unveiled the plan last year to forgive up to $20,000 in federal student loans for people making less than $125,000, with the largest amount going to people who received Pell Grants that go to students from low-income families. Estimates on the program's cost ranged from about $305 billion to $430 billion.

On Friday, Biden promised to try to find other ways to provide debt relief, but he cautioned that those processes could take longer.

An opinion poll released last month by Ipsos and USA Today found that Americans were split on the program the court struck down, with 47% supporting it and 41% opposing it. Support was higher, though not universal, among people with student loans.

Mike Linzbach was among the Minnesota graduates who didn't expect to be impacted by the ruling — no matter which way it went.

Linzbach, 41, earned an electrical engineering degree from the University of Minnesota and paid off his roughly $20,000 in student debt several years ago.

He said he thinks of it in terms of profit and loss: "You get the profit of having the education, and you get the loss of getting some debt with it," Linzbach said in an interview before the ruling, "but making sure that those things balance out or work in your favor over time is key."

Frances Stevenson, 27, who works for a nonprofit providing social services, worries that organizations already strained by the pandemic will be flooded with additional requests when payments resume.

"When the loans go into repayment, people aren't going to be able to pay them, or they're not going to be able to pay their other bills," Stevenson said.

Stevenson graduated from Luther College, a private school in Iowa, in 2017 and has about $11,000 in student debt remaining, the bulk of which would have been eligible for forgiveness under the Biden plan.

She had been hoping to go to graduate school in 2024 so she could get a master's degree in social work, which would make her eligible for a promotion and higher pay. She still wants to, but she doubts she'll be able to do it in the same timeframe.

John Runningen, a graduate of Minnesota State Community and Technical College in Fergus Falls, is also postponing his plans for further education.

He aims to become a social studies teacher but has about $7,000 in student loan debt, and family obligations have sapped his savings. Runningen, 22, now is taking a "gap year" and putting off a move to Minnesota State University Moorhead.

"I'm not going to be able to afford to go to college this year," said Runningen, the outgoing president of LeadMN, an organization representing students at two-year institutions in the Minnesota State system of colleges and universities. "To stop my education is a difficult decision to make. I know many others are going to have to make the decision, as well."

Reaction to the Supreme Court's ruling was swift and fell largely along party lines.

House Majority Whip Tom Emmer, a Republican who represents a district that runs from the southwestern suburbs of the Twin Cities through St. Cloud, tweeted that he was glad the court "set the record straight" by ruling that the president didn't have the authority to implement the program the way he did.

"Biden's student loan scam would've bailed out the wealthy while forcing taxpayers — including those who didn't go to college — to foot the bill," he wrote.

U.S. Rep. Ilhan Omar, a Democrat who represents Minneapolis and some surrounding suburbs, issued a statement urging the Biden administration to find a way "to follow through on their promise and ensure that working and middle class borrowers do not have their future cut short."

"43 million Americans. That's how many people the rightwing partisan justices on the Supreme Court just condemned to years — sometimes a lifetime — of debt thanks to their own corruption," she said.

In the hours after the ruling, groups representing students and college administrators were already making their pitches for how officials should next attempt to provide relief to students burdened by college costs.

Paul Cerkvenik, president of the Minnesota Private College Council, suggested that substantially increasing state and federal grants "is the best way to address student debt levels."

Carter Yost, government and legislative affairs director for the undergraduate student government at the University of Minnesota's Twin Cities campus, expects students will continue to push the White House and Congress for debt relief.

"I don't think this is the final say, and I don't think this is where the fight will end," he said. "Continuing to sound the alarms is important."

Staff photographer Angelina Katsanis contributed to this story.

The Star Tribune is looking for Minnesotans who are willing to talk about how student debt has affected their lives. If you're interested or would like to learn more, please include your contact information in the form below.