SCOTUS Appears Skeptical Of Biden Student Loan Plan, But Questions Of Standing Dominate Oral Arguments

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  • Tuesday morning’s oral arguments for Biden v. Nebraska and Department of Education v. Brown centered on the issue of standing, considering whether or not the plaintiffs’ incurred direct injury from the Biden student loan plan.
  • Justices also questioned the definition of “waive or modify” in the HEROES Act, the constitutional separation of powers, and the secretary of education’s justification for invoking emergency authority.
  • The Biden administration’s student loan plan would cancel up to $10,000 in student loan debt for non-Pell Grant recipients and up to $20,000 for Pell Grant recipients under the 2003 HEROES Act.

The Supreme Court heard oral arguments Tuesday morning for two highly-anticipated cases dealing with the Biden administration’s $400 billion student loan debt relief plan.

Biden’s plan, announced in August 2022, would cancel up to $10,000 in student loan debt for non-Pell Grant recipients and up to $20,000 for Pell Grant recipients under the 2003 HEROES Act, which allows the secretary of education to “waive or modify” provisions of student financial assistance programs during a national emergency to ensure recipients are “not placed in a worse position financially.” While justices appeared skeptical of the Biden administration’s broad use of executive power to grant loan forgiveness to nearly 40 million Americans, much of the political controversy took a backseat during oral arguments to the the less-explosive issue of standing, which monopolized a large share of the justice’s time.

With neither plaintiff facing a straightforward injury from the Biden relief plan, justices were pressed to consider whether the plaintiffs had adequate grounds on which to sue.

In Biden v. Nebraska, Department of Justice Solicitor General Elizabeth B. Prelogar, representing the Biden administration, questioned whether Missouri stood to lose anything by the enactment of the plan. While Missouri argued its Missouri Higher Education Loan Authority (MOHELA), a student loan servicer established and owned by the state, would lose 40% of its revenue if federal loans are forgiven, Prelogar said that Missouri would incur no direct harm. That’s because Missouri set MOHELA up as a distinct corporation, making it a separate legal entity able to sue under its own name. MOHELA, not Missouri, would have to bring the lawsuit, Prelogar argued.

In Department of Education v. Brown, which was brought by two individual loan holders unhappy with how student loan forgiveness under the HEROES Act applies to them. One individual, Myra Brown, says the plan makes her ineligible for student loan forgiveness and the other, Alexander Taylor, says he is only eligible for $10,000 rather than the full $20,000 given to Pell- Grant recipients. Given the circumstances, the court was pushed by Prelogar to consider whether a ruling in favor of the plaintiffs could provide “specific relief” to the injury.

Justice Sotomayor called the suit “totally illogical.”

“I want more. I’m going to file a suit to get more. But [now] I’m going to get nothing,” she said.

Michael Connolly, representing the plaintiffs, explained standing could be justified if there is “some possibility” of the plaintiffs getting relief as a result. The plaintiffs are hoping Dr. Secretary Cardona’s actions under the HEROES Act are overturned so the administration can reevaluate a student loan forgiveness plan under the proper channel, the Higher Education Act, potentially making them eligible for more aid.

The current plan helps “95% of all borrowers,” Connolly noted, but not Brown and Taylor. Roberts, Alito, and Gorsuch latched onto this concern, taking the opportunity to question Prelogar with numerous scenarios surrounding the student program’s fairness. “Why was it fair to those who did not get comparable relief?” Alito asked. (RELATED: ‘Meritless Lawsuits’: Activists, Dem Lawmakers Rally Outside Supreme Court Ahead Of Student Loan Cases)

SCOTUS Before Biden v. Nebraska

SCOTUS Before Biden v. Nebraska

The court did venture into some of the anticipated issues—among them, the statute’s definitions, the constitutional separation of powers, and the secretary of education’s justification for invoking emergency authority.

Many questions stemmed from the definition of “waive or modify” in the HEROES Act, considering whether Congress intended it to allow for the total cancellation of debt. Prelogar argued that the notion of debt forgiveness is embedded in the HEROES Act, later denying the charge that the executive circumvented Congress’ appropriation powers because “no money” was taken from the treasury.

“How is this a normal understanding of modify?” Chief Justice Roberts questioned, stressing that the program is dealing with “half a trillion” in government funds. The French Revolution could be described as “modifying” the status of the nobility, Roberts quipped, but that’s only because we have the literary devices of “sarcasm and understatement.”

“Could Congress foresee this?” he later asked.

Providing relief in an emergency is “the whole purpose of the HEROES act,” Justice Sotomayor noted, saying it is not the amount of funds given but the intent that is relevant.

Hitting an impasse on “waive or modify,” justices attempted to tease out Congress’ intent by highlighting other areas of the text. The HEROES Act empowers the secretary of education to modify requirements “in relation to the debt,” which Justice Barrett said seems to “suggest the relationship would continue.”

Roberts noted that the program puts some people in a “better position” than they were before, rather than ensuring they are not put into a “worse position” than the status quo. Prelogar firmly stood on the program’s necessity amid a national emergency, pointing to “documented” instances of Covid-19 leading to relief efforts, such as loan forbearance.

“Covid-19 has been the most devastating pandemic in our nation’s history,” Prelogar said. Without debt relief, she said there would have been “unprecedented defaults” on loans.

James Campbell, who represented the states, called this connection to national emergency “tenuous.” The HEROES act has “never forgiven” a single loan, he said. Multiple justices were also transparently critical of the secretary’s justification for enacting the program.

Justice Kavanaugh said the “finest moments” in the court’s history have been “pushing back on executive assertions of emergency power.” He appeared skeptical that debt relief has long been on the public policy agenda and was “suddenly” attached to pandemic relief.

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