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Student loan forgiveness plan on life support at Supreme Court

Student loan forgiveness plan on life support at Supreme Court

It's not only Biden's power but that of future administrations left hanging in balance

  • According to a report from the Student Borrower Protection Center, 90% of Black and 72% of Latinx students take out loans to attend college, compared with 66% of white students.
    Sophie Oppfelt/Cronkite NewsAccording to a report from the Student Borrower Protection Center, 90% of Black and 72% of Latinx students take out loans to attend college, compared with 66% of white students.

The conservative majority of the Supreme Court appeared skeptical on Tuesday that President Joe Biden has the authority to forgive billions in student loan debt, but questions remain over whether the states that brought the challenge have the requisite standing to do so. 

A main point of contention from the conservative wing was the cost of the plan Biden announced this past summer to forgive student loan debt from low-income borrowers. 

“We’re talking about half a trillion dollars,” Chief Justice John Roberts said. 

Up to 43 million borrowers are eligible for the plan, which will forgive up to $20,000 in loans for low-income borrowers who received Pell Grants and up to $10,000 from other borrowers earning less than $125,000 per year. At a cost of $30 billion a year over the next decade, on average, according to the Department of Education, the plan will mostly support borrowers earning less than $75,000 per year. 

Justice Clarence Thomas said Biden’s action would be considered a grant and that would fall into congressional appropriations. 

“What we’re talking about as a cancellation of $400 billion in debt, in effect, this is a grant of $400 billion,” the Bush appointee said. “It runs headlong into Congress’ appropriations authority.” 

Another conundrum debated at arguments this morning was whether the case before them should be there. The states have to prove they will be harmed by Biden’s program, and some of the justices did not appear to think they had done so. 

One of the states’ strongest standing arguments lies with the financial losses expected by the Missouri Higher Education Loan Authority, a state-created entity that services student loans. As Justice Ketanji Brown Jackson noted, however, Missouri is not liable for anything that happens to agency, which elected not to bring any suit despite being in the position to do so. 

“If we look at MOHELA, and we see that its financial interests are totally disentangled from the state,” the Biden appointee said. “It stands alone. It’s incorporated separately. The state is not liable for anything that happens to MOHELA. 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.” 

Justice Amy Coney Barrett asked why MOHELA didn’t just bring the suit itself. 

The three liberal members of the court appeared to think Biden did have the authority to forgive student loans on the basis of the COVID-19 national emergency. The Higher Education Relief Opportunities for Students Act of 2003, which was passed in the aftermath of the 9/11 terror attacks, allows the education secretary to forgive student debt in times of war or national emergency to prevent dire financial hardship. Biden leaned on the law as the basis for his loan-forgiveness plan, warning financial hardships from the COVID-19 pandemic would leave borrowers to default on their loans.

Justice Elena Kagan said the Heroes Act clearly authorized Biden’s actions. 

“We deal with congressional statues every day that are very confusing,” the Obama appointee said. “This one is not.” 

Jackson questioned if the justices should be the ones to decide such a controversial political question — especially with the standing questions. 

“I feel like we really do have to be concerned about jumping into the political fray unless we are prompted to do so by a lawsuit that is brought by someone who has an actual interest,” Jackson said. 

Justice Sonia Sotomayor said the education secretary should have the final word on the case since he has the expertise to understand problems with student loans. 

“There are 50 million students who are going to benefit from this,” the Obama appointee said.

She said the pandemic left many of these borrowers in financial peril that could lead them to default. 

“The evidence is clear that many of them will have to default,” Sotomayor said. “The financial situation will be even worse because once you default, the hardship on you is exponentially greater. You cannot get credit. You’re going to pay higher prices for things. They are going to continue to suffer from this pandemic in a way that the general population doesn’t. And what you are saying is, now we are going to give judges the right to decide how much aid to give them instead of the person with the expertise?” 

Justice Neil Gorsuch questioned if the education secretary considered the costs of Biden’s program beyond loans being forgiven. Gorsuch asked how Biden’s program was fair to people who already paid their loans or those who did not qualify for them. 

“I don’t just mean the numbers but generally the negative effects to the economy, to other people who don’t have this opportunity for that relief,” the Trump appointee said. 

Roberts appeared to think the court should apply the major questions doctrine. Last term the justices created a precedent that forces executive agencies to get explicit congressional authorization for “major” actions that result in large economic and political significance. 

“I just wonder, given the posture of the case and given our historic concern about the separation of powers, you would recognize at least that this is a case that presents extraordinarily serious, important issues about the role of Congress and about the role that we should exercise in scrutinizing that,” Roberts said. 

In an objection to Biden’s use of the Heroes Act to forgive student loans, six Republican-led states sued to halt the program. Claiming that the Biden administration had abused its executive authority throughout the pandemic, the states secured a preliminary injunction from the Eighth Circuit. The high court has already halted the CDC’s eviction moratorium and OSHA’s vaccine-or-test mandate. Now red states are asking the justices to tackle student debt relief. 

U.S. Solicitor General Elizabeth Prelogar noted that the Biden administration was not the only White House to use this authority. Student loans were originally paused under the Trump administration using the same authority, and the states have not challenged that action. Prelogar said Congress intentionally created the Heroes Act to be broad enough to account for emergencies, and the COVID-19 pandemic falls squarely within lawmakers’ intended purpose. 

“Congress expressly authorized the secretary to waive or modify any title for provision in emergencies to provide financial relief to borrowers,” Prelogar said. 

Nebraska Solicitor General James Campbell urged the court to apply the major questions doctrine, contending that Biden’s action aimed at circumventing Congress on a major political question. 

“After many failed legislative efforts, the secretary seeks to write off nearly half a trillion dollars in loans for over 40 million borrowers,” Campbell said. “No statute authorizes this sweeping action.” 

Also challenging Biden’s plan at the Supreme Court on Tuesday were two student loan borrowers — Myra Brown and Alexander Taylor. Brown and Taylor's suits against student debt relief hinge on the administration's failure to provide an opportunity for public comments on the plan. A judge ruled against the borrowers on the notice-and-comment-period claims but advanced the case on claims that Biden exceeded his authority under the Heroes Act.

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