The US Supreme Court has blocked President Joe Biden’s plans to forgive student loan debt for millions of Americans, according to White House sources.

The 6-3 decision effectively killed the $400bn plan, announced by the president last year, and left borrowers on the hook for repayments that are expected to resume by late summer.

The court held that the administration needs Congress’ endorsement before undertaking so costly a program.

The court’s action dealt a blow to the 26 million US borrowers who applied for relief after the president announced the plan in August 2022.

It also marks a political setback for the Democratic president, as tackling student loan debt was a key pledge he made on the campaign trail in 2020 to energise younger voters.

Mr Biden’s plan fulfilled his campaign promise to cancel a portion of $1.6 trillion in federal student loan debt but was
criticised by Republicans who called it an overreach of his authority and an unfair benefit to college-educated borrowers while other borrowers received no such relief.

Under the plan, the administration proposed to forgive up to $10,000 in federal student debt for Americans earning less than $125,000 a year.

Pell Grant recipients, who are the majority of borrowers, would be eligible for $10,000 more in debt relief.

The ruling puts pressure on the Biden Administration to find an alternative way to forgive student debt that could potentially withstand legal challenge.

Loan repayments are expected to resume by late August under a schedule initially set by the administration and included in the agreement to raise the debt ceiling.

Payments have been on hold since the start of the COVID pandemic more than three years ago.