Biden student debt relief plan met with skepticism from U.S. Supreme Court conservatives

WASHINGTON – The majority conservative wing of the U.S. Supreme Court appeared skeptical Tuesday that the Biden administration had the authority to implement a federal student debt relief program that was estimated to potentially aid millions of borrowers.

The conservative justices, who hold a 6-3 majority on the court, questioned whether the Department of Education could implement a program without explicit congressional approval that would cost more than $400 billion over the course of 30 years. 

And they questioned the fairness of a program that would help those borrowers who qualify, but not every student loan borrower.

Chief Justice John G. Roberts Jr., along with other justices, invoked the “major questions doctrine,” which holds that if the federal government is initiating a program with major national consequences, it must first clearly be approved by Congress. 

Liberal justices pushed back and argued that Congress did give the Department of Education the authority to forgive federal student loan debt during a national emergency such as the coronavirus, and to act on that authority, preventing borrowers from default or a worse predicament. 

The liberal justices also questioned whether the plaintiffs in the two cases that were argued even had the legal standing to sue. 

One case was filed by six Republican attorneys general, Biden v. Nebraska. The other case, U.S. Department of Education v. Brown, was brought by two student loan borrowers. Both suits are seeking to permanently block the program.  

On both cases, U.S. Solicitor General Elizabeth B. Prelogar – representing the Biden administration – argued that neither the states nor the two individual borrowers have legal standing. 

Prelogar also argued that Congress gave the secretary of education the authority to enact this one-time relief under the Higher Education Relief Opportunities for Students Act of 2003, known as the HEROES Act, which allows for the secretary to “waive or modify any statutory or regulatory provision” to help borrowers in a national emergency.

Justice Elena Kagan, a member of the liberal wing on the court, said the language in the HEROES Act clearly gave the Biden administration the authority to act on its debt relief initiative.

Prelogar also noted that both the Trump and Biden administrations have used the HEROES Act to pause repayment on federal student loans because of the coronavirus pandemic for the last three years.

The Government Accountability Office has estimated that the pause on student loan repayment has cost the federal government more than $100 billion. 

However, Roberts argued the Department of Education’s decision was not a modest modification, bringing up the cost factor. The Congressional Budget Office has estimated that the program would cost up to $400 billion over 30 years.  

“We’re talking about half a trillion dollars and 43 million Americans – how does that fit under the normal understanding of modifying?” Roberts asked. 

More than 43 million Americans have student loan debt, and the Federal Reserve estimates that the total U.S. student loan debt is more than $1.76 trillion.

Prelogar said the states “aren’t contesting that the ordinary meaning of waive means to eliminate an obligation in its entirety.” 

“If you look at that phrase in the context of the statute, that means that modify has to mean making a change up to the point of wholesale elimination,” she said. “It would be really strange for Congress to say, ‘You can eliminate obligations altogether or tweak them just the littlest bit, but you can’t do anything in between.’”

She said to avoid defaults and delinquencies on federal student loans, Secretary of Education Miguel Cardona “invoked the HEROES Act to provide a measure of loan forgiveness to ensure that this unprecedented pandemic does not leave borrowers worse off in relation to their student loans.”

Appropriations authority

Justice Clarence Thomas, a conservative, called the $400 billion in relief a grant, and questioned if it overrides congressional appropriations authority. 

The Biden administration estimated that up to 40 million Americans would potentially qualify for the program, which would forgive up to $10,000 in federal student loan debt for single adults making under $125,000 a year, or under $250,000 for married couples. Borrowers who received Pell Grants are eligible for an additional $10,000 in forgiveness of federal student loans. 

Prelogar said that because implementing the program does not require any money being drawn from the Treasury, it doesn’t raise an appropriations issue. 

Suffering harm

In both cases, there were arguments on whether plaintiffs had suffered harm, granting them the right to sue. 

Biden v. Nebraska was filed by Republican attorney generals in Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina. That suit originally argued that the Biden administration’s student debt relief plan would financially harm the revenue of states that profit from federal loans, if those borrowers have their loans forgiven.

A lower court ruled against the Republican officials from six states, but an appeals court held in favor of the states, finding that Missouri would be harmed in the future. That judge filed a national injunction, effectively halting the program.

Missouri argued it had the right to bring its challenge before the court on behalf of a third party, a Higher Education Loan Authority the state created in 1981 to collect borrowers’ payment on behalf of the government, known as MOHELA.

Four of the justices – Kagan, Sonia Sotomayor, and Ketanji Brown Jackson on the liberal wing of the court and Justice Amy Coney Barrett of the conservative wing – were skeptical that the state had legal standing. 

“Usually we don’t allow one person to step into another’s shoes and say, ‘I think that that person has suffered a harm,’ even if the harm is very great,” Sotomayor said. “We leave it to the person, him or her or itself, to make that judgment.”

Barrett questioned why, if MOHELA is its own state agency, Missouri didn’t “strong arm” MOHELA into bringing its own case, since that agency had clear standing to bring forth a suit alleging harm.

Barrett also noted that Prelogar “conceded that if MOHELA was here, MOHELA would have standing.”

Jim Campbell, the solicitor general of Nebraska who is defending the states, said that reasoning was a “question of state politics,” and said “if it’s a state-created and state-controlled entity that performs government functions, the state can speak for it regardless.”

Sotomayor pointed out that the state of Missouri had to file a special request for documents to get MOHELA to cooperate.

“You couldn’t even get documents from MOHELA, without filing the state equivalent of a (Freedom of Information Act) request,” she said.

Campbell said he believes that shows MOHELA is a “state entity,” because it is subject to public records law.

Jackson questioned how an injury to MOHELA could be an injury to the state, when “the state is not liable for what happens to MOHELA.”

Prelogar said that when MOHELA has been sued, the state of Missouri has been absent, because “state law makes clear that Missouri cannot be on the hook for MOHELA liabilities.” 

Student loan borrowers

Other questions were on whether the two borrowers in the second suit had standing to bring their case to the court.

U.S. Department of Education v. Brown was brought by a conservative advocacy group on behalf of two student loan borrowers, Alexander Taylor and Myra Brown, who argue that the Biden administration did not go through the proper rule making procedure when enacting the debt relief plan, among other things.

Taylor is eligible for up to $10,000 in student debt relief, but not up to $20,000, which is for recipients of Pell Grants. Brown does not qualify for any loan forgiveness because her loans are now held by private entities. The Department of Education tried to allow borrowers such as Brown to consolidate their debt into a Direct Loan in order to qualify for relief, but it reversed its policy to avoid legal challenges. 

The conservative justices questioned the fairness of the program, and if the Biden administration had taken into consideration people who would not benefit. 

Justice Neil M. Gorsuch asked if the Biden administration had considered that some people had paid off their loans, or had deliberately “planned their lives around not seeking loans.”

He said that this program could be seen as benefiting “one group of favored persons over others” – the basis of the argument in the suit brought by the two individuals. 

Justice Samuel Alito asked if Education Secretary Miguel Cardona was required to create a policy to address student debt relief, which Prelogar said he was not. 

He pressed again, asking why it was considered fair. 

“It was fair because in the absence of this relief, it’s undisputed that there are going to be millions of student loan borrowers who are not going to be able to pay their student loans,” she said. 

Jackson noted that in terms of fairness, there were billions given to various companies and organizations under the pandemic-era Paycheck Protection Program, “because Congress said to do it,” and that not everyone was entitled to that money because they didn’t own a business or nonprofit. 

“I just don’t know how far we can go with this notion of, to the extent that the government is providing much-needed assistance to people in an emergency, it’s going to be unfair to those who don’t get the same benefit,” she said.

Brown had a business loan forgiven through the Biden administration’s Paycheck Protection Program, which was used to help businesses weather the coronavirus pandemic. She owns the Texas business Desert Star Enterprises Inc., which was granted a $48,000 loan and $47,996 was forgiven on April 27, 2022.

Sotomayor said that the other borrower in the case, Taylor, who qualified for up to $10,000, would get nothing if this program is struck down. 

“This is so totally illogical to me that you come into court to say ‘I want more, I want to file a suit to get more, but I know I’m going to get nothing.’”

Campbell, from Nebraska, argued that the borrowers in the case want the Department of Education “to stop this program so that it can go through the proper process, so that we have an opportunity to comment and urge the secretary to forgive our debts right now.”

He argued that Brown has $17,000 in student loan debt for which she cannot get relief.

A decision from the court could take months but would come before the end of the term this summer.

The Biden administration has stated that regardless of the outcome, the pandemic-era pause on federal student loan repayments will lift on June 30, and those borrowers will be required to begin repayments either after the Supreme Court’s decision or 60 days after the June deadline.

Rally outside

As both sides argued their cases before the court, more than two dozen organizations bused in hundreds of borrowers and supporters of student debt relief to rally outside the Supreme Court. 

The legal challenges have left millions of federal student loan borrowers in limbo. The Department of Education has collected more than 24 million applications for the program and 16 million borrowers were accepted. 

Due to the pending lawsuit, the Department of Education had to stop accepting applications after lower courts put the program on hold.

Democratic lawmakers who joined protestors included Sens. Elizabeth Warren of Massachusetts, Bob Menendez of New Jersey, and Bernie Sanders of Vermont, as well as Reps. Pramila Jayapal of Washington state, Ayanna Pressley of Massachusetts, Judy Chu of California, Ilhan Omar of Minnesota, Cori Bush of Missouri, and Maxwell Frost of Florida. 

The ranking member of the House Education and Workforce Committee, Democrat Bobby Scott of Virginia, said in a statement that the Biden administration’s plan supports borrowers who need it most, arguing that 90 percent of the student loan relief would go to borrowers who make less than $75,000 a year. 

“Unfortunately, Republican politicians are denying borrowers – including an estimated 140,000 borrowers in my home district – the relief they need to make ends meet,” he said. “Regardless of these political challenges, I will continue working to solve the underlying problems that caused the student debt crisis in the first place.”

Warren has called for as much as $50,000 in student loan forgiveness. She released a report in February that stated middle and low-income families would be provided with relief and the program.

“Over 40 million borrowers have their financial futures at stake as the Supreme Court hears the debt relief case, and the ones carrying the heaviest burden are those from low-income backgrounds, Black and Latino borrowers, and public service workers like teachers and nurses,” according to the report. 

Senate Majority Leader Chuck Schumer of New York also said on the Senate floor the program was critical relief for low- and middle-class families.

“This isn’t a handout to the wealthy – far from it,” he said. “This is critical relief to working and middle-class families. For generations, higher education was the ladder up into the middle class – especially for millions of Black, Latino, and Asian Americans.”