Supreme Court Appears Skeptical of Biden’s Student Loan Forgiveness Plan
WASHINGTON — The Supreme Court’s conservative majority seemed deeply skeptical on Tuesday of the legality of the Biden administration’s plan to wipe out more than $400 billion in student debt, heightening the prospect that the justices would thwart efforts to forgive the loans of tens of millions of borrowers.
Chief Justice John G. Roberts Jr. indicated that the administration had acted without sufficiently explicit congressional authorization to undertake one of the most ambitious and expensive executive actions in the nation’s history, violating separation-of-powers principles.
“I think most casual observers would say,” the chief justice said, that “if you’re going to give up that much amount of money, if you’re going to affect the obligations of that many Americans on a subject that’s of great controversy, they would think that’s something for Congress to act on.”
The court’s three liberal members said Congress had already acted, by passing a law in 2003 that authorized the secretary of education to address emergencies.
“Congress could not have made this much more clear,” Justice Elena Kagan said, adding: “We deal with congressional statutes every day that are really confusing. This one is not.”
By the end of about three and a half hours of arguments in two separate cases, the court’s conservative majority seemed likely to dash the hopes of the 26 million borrowers who have already applied for loan relief. If the administration is to prevail, it would probably be on the ground that none of the plaintiffs in the two cases had established standing to sue, but that outcome did not seem likely, either.
The chief justice, joined by other members of the court’s six-member conservative majority, invoked the “major questions doctrine,” which requires that government initiatives with major political and economic consequences be clearly authorized by Congress.
There was something close to a consensus that the debt forgiveness program qualified as major.
“We’re talking about half a trillion dollars and 43 million Americans,” Chief Justice Roberts said, referring to the number of affected borrowers. Justice Samuel A. Alito Jr. indicated that the ordinary colloquial meaning of “major questions” encompassed “what the government proposes to do with student loans.”
Even Justice Sonia Sotomayor, a liberal, said the sums involved were legally significant. “That seems to favor the argument that this is a major question,” she said.
The administration was spurred to act because of the pandemic and its lingering effects. The law the administration relied on, the Higher Education Relief Opportunities for Students Act of 2003, usually called the HEROES Act, gives the secretary of education the power to “waive or modify any statutory or regulatory provision” to protect borrowers affected by “a war or other military operation or national emergency.”
Chief Justice Roberts and Justice Clarence Thomas were skeptical that the words “waive or modify” allowed outright cancellation. “It doesn’t say modify or waive loan balances,” the chief justice said.
Justice Brett M. Kavanaugh said that Congress “could have in 2003 referred to loan cancellation and loan forgiveness, and those are not in the statutory text.”
Later, though, Justice Kavanaugh described “waive” as “an extremely broad word,” adding that “in 2003, Congress was very aware of potential emergency actions in the wake of Sept. 11.”
Solicitor General Elizabeth B. Prelogar, representing the administration, said its plan fit comfortably within the statutory language, which she said had authorized the secretary of education to act. “The whole point of this statute, its central mission and function, is to ensure that in the face of a national emergency that is causing financial harm to borrowers, the secretary can do something,” she said.
Ms. Prelogar noted that the Trump administration had also relied on the 2003 law.
In March 2020, President Donald J. Trump declared that the coronavirus pandemic was a national emergency, and his administration invoked the HEROES Act to pause student loan repayment requirements and to suspend the accrual of interest.
The Biden administration followed suit. As of April, the payment pause has cost the government more than $100 billion, according to the Government Accountability Office.
“That has been an economically significant program,” Ms. Prelogar said of the pause. “It’s currently costing the federal government more per year than this loan forgiveness plan would cost the government annually.”
In August, the administration said it planned to switch gears, ending the repayment pause but forgiving $10,000 in debt for individuals earning less than $125,000 per year, or $250,000 per household, and $20,000 for those who received Pell grants for low-income families. The nonpartisan Congressional Budget Office has estimated the plan’s price tag at $400 billion.
In separate cases, six Republican-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — and two individuals sued to stop the new plan, relying on recent decisions employing the major questions doctrine.
In June, the Supreme Court invoked the doctrine in a decision that curtailed the Environmental Protection Agency’s power to address climate change. Without “clear congressional authorization,” the court said, the agency could not act.
The court also ruled, on similar grounds, that the Centers for Disease Control and Prevention was not authorized to impose a moratorium on evictions and that the Occupational Safety and Health Administration was not authorized to tell large employers to have their workers vaccinated against Covid-19 or undergo frequent testing.
The first question in both cases is whether the plaintiffs have suffered the sort of direct and concrete injury that gives them standing to sue.
The point of the standing doctrine, Justice Ketanji Brown Jackson said, is to “allow the political branches to hash this out without interference, you know, from a torrent of lawsuits brought by states and entities and individuals who don’t have a real personal stake in the outcome.”
Much of the argument focused on a nonprofit entity that services federal loans, the Missouri Higher Education Loan Authority, also known as MOHELA. The challengers argued that its potential losses from the loan forgiveness program were enough to confer standing because it is effectively an arm of the State of Missouri. They also argued that the authority might fail to make payments to Missouri if the program were allowed to proceed.
Justice Kagan said it was significant that the loan authority itself had not sued over the debt forgiveness program.
“Usually we don’t allow one person to step into another’s shoes and say, ‘I think that that person suffered a harm,’ even if the harm is very great,” she said.
If Missouri really controlled the loan authority, Justice Amy Coney Barrett asked James A. Campbell, Nebraska’s solicitor general, who represented the states, “why didn’t the state just make MOHELA come then?”
Mr. Campbell said that it was “a question of state politics.”
Ms. Prelogar conceded that the loan authority would have standing had it chosen to sue in its own name. But it did not, she said, and Missouri was not entitled to sue on its behalf.
Justice Jackson said that the authority was independent of the state.
“Its financial interests are totally disentangled from the state, it stands alone, it’s incorporated separately, the state is not liable for anything that happens to MOHELA,” she said. “I don’t know how that could possibly be a reason to say that an injury to MOHELA should count as an injury to the state.”
Given the inclination of the conservative justices to question the legality of the program, if the administration is to prevail it may have to do so on the standing question. But there was little evidence that the conservatives were particularly receptive to the administration’s position on that issue in the first case, Biden v. Nebraska, No. 22-506.
The second case, Department of Education v. Brown, No. 22-535, was brought by the two borrowers, Myra Brown and Alexander Taylor, and it also raised questions about standing. Ms. Brown is ineligible for relief under the plan because her loans are held by commercial entities rather than the government, while Mr. Taylor is eligible for $10,000 rather than $20,000 because he did not receive a Pell grant.
A trial court ruled that they had standing to sue because they had been deprived of the opportunity to urge the administration to expand the plan to provide greater debt relief.
Justices across the ideological spectrum seemed unpersuaded by the borrowers’ position.
“Talk about ways in which courts can interfere with the processes of government through two individuals in one state who don’t like the program can seek and obtain a universal relief barring it for anybody anywhere,” Justice Neil M. Gorsuch said.
If the Supreme Court rules that at least one plaintiff in one of the cases has standing, it will address whether the debt forgiveness plan is lawful.
Several justices used the second argument to make points about the program, with some saying it was unfair and overly blunt.
“Didn’t half the borrowers say they would not have any trouble paying their loans without regard to the forgiveness program?” Chief Justice Roberts asked.
Ms. Prelogar said that it would be difficult to segregate the two groups and that the pause in loan repayments applied to all borrowers.
The chief justice then asked whether it made sense to forgive loans taken out by students but not, say, ones taken out by a young person starting a lawn care business.
“I may have views on the fairness of that and mine don’t count,” Chief Justice Roberts said. “We like to usually leave situations of that sort, when you’re talking about spending the government’s money, which is the taxpayers’ money, to the people in charge of the money, which is Congress.”
Justice Sotomayor responded that “everybody suffered in the pandemic, but different people got different benefits because they qualified under different programs.”
Justice Kagan also addressed the chief justice’s concern. “Congress passed a statute that dealt with loan repayment for colleges, and it didn’t pass a statute that dealt with loan repayment for lawn businesses,” she said. “And so Congress made a choice, and that may have been the right choice or it may have been the wrong choice, but that’s Congress’s choice.”
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