Previewing the Supreme Court’s Upcoming Decisions on Student Loan Forgiveness
The Supreme Court Building in Washington, D.C. Source for photo: Gallup
On Tuesday, February 28, I had the opportunity to walk through a throng of demonstrators and up the marble steps of the Supreme Court Building before taking a seat on the side of the courtroom for the day’s oral arguments. On the docket were Biden v Nebraska and Department of Education v Brown, two cases challenging the Biden Administration’s policy of forgiving federal student loans up to $20,000 per borrower. The Justices would question lawyers representing the federal government, a collection of Republican states, and two individuals who did not qualify for the full extent of debt forgiveness.
Although the court battle took place amid a particularly hostile political debate about student loan forgiveness, the decision that the Court is expected to release in June will be just one of several cases that have challenged the power of the president to act independently of Congress. The current Court’s conservative majority has adopted the “major questions” doctrine, which holds that when federal agencies seek to make decisions of “major national significance,” they must receive explicit congressional authorization to do so. In the first explicit use of the term, the Court decided in 2022 that the EPA did not have the power to mandate cap-and-trade regulations on emissions by power plants. Although Biden Administration lawyers argued that the agency was implicitly permitted by Congress to implement the system, the Court judged that the new rule had “vast economic and political significance” and therefore needed an explicit mandate.
In Biden v Nebraska, the U.S. Solicitor General, Elizabeth Prelogar, argued that the Executive’s ability to forgive student debt fell within the statutory power granted by Congress in the HEROES Act, which authorized the Secretary of Education to “waive or modify any statutory or regulatory provision” in the federal student loan program deemed necessary in connection with a national emergency. Because of the economic burden posed by COVID, the Department of Education had already put a moratorium on the repayment of loans during the pandemic. Fulfilling a campaign promise, President Biden then moved to forgive up to $10,000 for certain borrowers and $20,000 for others to avoid leaving them worse off financially because of the pandemic. On behalf of six state governments, Nebraska Solicitor General James Campbell argued that the HEROES Act did not approve the “sweeping action” to write off “nearly a half-trillion dollars.”
On the case's merits, the Supreme Court seemed skeptical that the White House had acted within the power granted to it by Congress in the HEROES Act. In a chuckling reproach of the U.S. government’s argument, Chief Justice John Roberts backed a narrow definition of “waive and modify” using the words of the late Justice Antonin Scalia to liken the Biden Administration’s use of the words to saying that “the French Revolution modified the status of the French nobility.” He also asked Prelogar if she thought that Congress would consider student loan forgiveness to be “major,” to which the Solicitor General responded, “Maybe colloquially,” but not by the letter of the law. The Chief Justice’s sentiment was echoed by each of his more conservative colleagues, signaling that a majority of the Court did not consider the Secretary of Education’s forgiveness of loans to be lawful.
On the question of standing, however, the opinions hinted at by the Justices were less conclusive, and they spent much of the morning interrogating both sides on the topic. The bedrock of standing before the Supreme Court lies in Article III of the Constitution, which gives the Court the right to rule on “cases” and “controversies”. To qualify as such, litigants must prove that they have personally been particularly and concretely harmed by the opposing party in a way that would be redressable by the Court. Here, the states’ argument relied on the loss of revenue that loan forgiveness incurred upon MOHELA, a Missouri loan servicer, which they claimed in turn harmed the state of Missouri. The connection between Mohela and the state was debated at length because although the company had been founded by the government and contributed to a public scholarship fund, its operations and governance were intentionally separate from the state government. Justices Elena Kagan and Amy Coney Barrett appeared suspicious of Missouri’s standing, with Kagan asking Campbell why MOHELA itself did not bring a suit, which Barrett followed up on by questioning why the state could not “strong-arm” the corporation to do so. The fate of the Biden Administration’s program will likely rest on whether the Justices ultimately decided that MOHELA’s lost earnings inflicted a concrete injury on the state of Missouri.
In a shorter session immediately after the arguments in Biden v Nebraska, the Justices heard the arguments on the case of two individuals who were petitioning the Court to rule against the Biden loan forgiveness program because they had not qualified for the maximum relief. This premise was treated with much more skepticism by the Justices than the states’ case, because it was unlikely that the judicial result they were seeking would redress the harm they claimed to have received. To even the untrained observer, it was clear that the two respondents had sued due to their opposition to the loan forgiveness plan rather than any hope that they might receive a more generous package from the government if it was forced to scrap its first attempt and try again.
What next? The Supreme Court will release its decision on both cases in the coming weeks, determining the financial position of 43 million borrowers. Regardless of the outcome, the decision will be an indicator of President Biden’s ability to enact serious policy change for the remainder of his term, and the extent of executive powers under the current Court. With a Republican majority in the House of Representatives, a ruling against Biden could foretell that future attempts to advance his agenda will fail to clear the hurdles of legislative opposition and a less-than-friendly Court.