The Supreme Court is skeptical of Biden’s plan to eliminate student loans

WASHINGTON – The conservative majority of the Supreme Court seemed deeply skeptical on Tuesday over the legality of the Biden administration’s plan to pay off more than $400 billion in student debt, raising the prospect that the judiciary would thwart efforts to lend to tens of millions of borrowers.

Chief Justice John G. Roberts Jr. pointed out that the administration acted without sufficient express authorization from Congress to carry out one of the most ambitious and costly executive measures in the country’s history, in violation of the principles of the separation of powers.

“I think most casual observers would say,” the chief justice said, “that if you give up that much money, if you compromise the commitments of so many Americans on a great issue of controversy, they’d think Congress would act on it.” must.”

The three Liberal members of the court said Congress had already acted by passing legislation in 2003 empowering the Secretary of Education to handle emergencies.

“Congress couldn’t have made this much clearer,” Judge Elena Kagan said, adding, “We deal with congressional bylaws every day that are really confusing. It’s not this one.”

At the end of about three and a half hours of arguments in two separate cases, the court’s conservative majority appeared to dashed the hopes of the 26 million borrowers who have already applied for credit relief, including millions who have received approval. If the administration were to prevail, it would likely be because neither plaintiff had established standing in either case, but that outcome did not seem likely either.

The chief justice, along with other members of the court’s six-member conservative majority, invoked the Major Questions Doctrine, which requires government initiatives with major political and economic implications to be clearly approved by Congress.

There was something of a consensus that the debt relief program was considered important.

“We’re talking half a trillion dollars and 43 million Americans,” Chief Justice Roberts said, citing the number of borrowers affected. Judge Samuel A. Alito Jr. pointed out that the common colloquial meaning of “important issues” included “what the government intends to do with student loans.”

Even Judge Sonia Sotomayor, a liberal, said the sums involved were legally significant. “That seems to favor the argument that this is an important question,” she said.

Hundreds of protesters outside the courthouse, many of whom were college students from across the country, underscored the point. Mr. Biden’s plan would get them out of enormous debt, they said.

Kaylah Lightfoot, a sophomore at the University of Mary Washington in Fredericksburg, Virginia, described the lengthy court battle over the program as stressful. “I’m really just trying to stay focused and keep going,” she said.

The administration has been spurred into action due to the pandemic and its ongoing impact. The law on which the administration relied, the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act, gives the Secretary of Education the power to “waive or amend any statutory or regulatory provision” to allow borrowers protect those affected by “a war” or other military operation or national emergency.”

Chief Justice Roberts and Justice Clarence Thomas were skeptical that the words “repeal or alter” would allow for a full repeal. “It does not say to amend or waive loan balances,” the chief justice said.

Judge Brett M. Kavanaugh said that Congress “could have referred to loan termination and forgiveness in 2003, and these are not in the statute.”

However, Judge Kavanaugh later described “waiver” as “an extremely broad word,” adding that “in 2003, Congress was acutely aware of the potential post-9/11 emergency response.”

Attorney General Elizabeth B. Prelogar, who is representing the administration, said her plan fits comfortably within legal language, which she says empowered the Secretary of Education to act. “The crux of this statute, its core mission and function, is to ensure that the Secretary can do something in the face of a national emergency that is causing financial damage to borrowers,” she said.

Ms. Prelogar noted that the Trump administration 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 suspend student loan repayment requirements and suspend interest accrual.

The Biden administration followed suit. The payments pause cost the government more than $100 billion through April, according to the Government Accountability Office.

“It was an economically significant program,” Ms. Prelogar said of the break. “It’s currently costing the federal government more per year than this loan forgiveness plan would cost the government annually.”

In August, the government said it planned to shift gears to end the moratorium on repayments but forgive $10,000 in debt for those earning less than $125,000 a year, or $250,000 per household, and $20,000 for those receiving Pell grants for low-income families. The bipartisan Congressional Budget Office has estimated the cost of the plan at $400 billion.

In separate cases, six Republican-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — and two people have sued to stop the new plan, citing recent decisions applying the Big Questions doctrine .

In June, the Supreme Court invoked this doctrine in a decision that limited the Environmental Protection Agency’s powers to combat climate change. Without “Clear Approval of Congress” said the courtthe agency could not act.

The court also ruled, on similar grounds, that the Centers for Disease Control and Prevention did not have the power to impose a moratorium on evictions and that the Occupational Health and Safety Administration did not have the power to order large employers to vaccinate their workers against Covid-19 or subjected to frequent testing.

The first question in both cases is whether the plaintiffs have suffered direct and specific damage giving them a right to bring an action.

The point of the standing doctrine, Justice Ketanji Brown Jackson said, is to “allow the political branches to sort this out without interference, you know, from a barrage of lawsuits being brought by states and corporations and individuals who have no real… people share in the result.”

Much of the dispute centered on a nonprofit entity that services federal loans, the Missouri Higher Education Loan Authority, also known as MOHELA. The challengers argued that since it is effectively an arm of the state of Missouri, the potential losses from the loan forgiveness program were enough to confer standing. They also argued that the agency might not make payments to Missouri if the program went ahead.

Judge Kagan said it was significant that the credit authority itself did not sue over the debt relief program.

“Usually we don’t allow one person to follow in another’s footsteps and say, ‘I think that person has suffered harm,’ even if the damage is very great,” she said.

If Missouri really controlled the credit agency, Judge Amy Coney Barrett asked James A. Campbell, the Nebraska Attorney General representing the states, “Why didn’t the state just let MOHELA come along back then?”

Mr Campbell said it was “a matter of state policy”.

Ms Prelogar acknowledged that the credit authority would have stood firm if she had chosen to sue on her own behalf. But she didn’t, she said, and Missouri doesn’t have the right to sue on her behalf.

Justice Jackson said the agency is independent of the state.

“Its financial interests are completely separate from the state, it stands alone, it is incorporated separately, the state is not liable for anything that happens to MOHELA,” she said. “I don’t know how that could be a reason to say that a violation of MOHELA should be considered a violation of the state.”

Given the conservative judges’ propensity to question the legitimacy of the program, if the government is to prevail it may have to do so on the standing question. But there was little evidence that conservatives in the first case, Biden v. Nebraska, No. 22-506, were particularly open to the administration’s stance on the issue.

The second case, Department of Education v. Brown, No. 22-535, was brought by the two borrowers, Myra Brown and Alexander Taylor, and also raised questions about the lawsuit. Ms. Brown is not eligible for relief under the plan because her loans are held by commercial entities and not the government, while Mr. Taylor is eligible for $10,000 instead of $20,000 as he did not receive a Pell grant.

A trial court ruled that they had standing because they had been denied the ability to urge the government to expand the plan to provide greater debt relief.

Judges from across the ideological spectrum seemed unconvinced about the borrowers’ position.

“Talk about how courts can intervene in the processes of government through two people in a state who dislike the program,” Judge Neil M. Gorsuch said, and “seek and obtain a universal remedy that excludes it for everyone everywhere.” .”

If the Supreme Court decides that at least one plaintiff has standing in either case, it will consider whether the debt relief plan is legitimate.

Several judges used the second argument to make points about the program, with some saying it was unfair and overly blunt.

“Didn’t half of the borrowers say that regardless of the forgiveness program, they would have no problem paying their loans?” asked Chief Justice Roberts.

Ms Prelogar said it was difficult to separate 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 by a young person starting a lawn care business.

“I may have opinions about whether this is fair and mine don’t count,” Chief Justice Roberts said. “Typically, when it comes to spending the government’s money, which is the taxpayer’s money, we leave situations like this to the people who are in charge of the money, which is Congress.”

Judge Sotomayor responded that “everyone has suffered from the pandemic, but different people have received different benefits because they qualified for different programs.”

Justice Kagan also addressed the Chief Justice’s concerns. “Congress passed legislation dealing with college loan repayments, and it didn’t pass legislation dealing with lawn company loan repayments,” she said. “And so Congress made a choice, and that might have been the right choice, or it might have been the wrong choice, but that’s the choice of Congress.”

Aishvarya Kavi contributed reporting.