Written By Adam S. Minsky, JD
President Joe Biden spoke publicly about the landmark Supreme Court hearing that will determine the fate of his unprecedented student loan forgiveness plan.
“I'm confident we're on the right side of the law,” Biden said on Wednesday, but “I'm not confident about the outcome of the decision yet.”
Biden’s mass student loan forgiveness initiative that he announced last year would eliminate up to $20,000 in federal student debt. Up to 40 million borrowers could qualify for relief. But before that relief could be implemented, two federal courts blocked the plan in response to duel legal challenges. The Biden administration appealed to the Supreme Court, which agreed to consider the challenges. Oral arguments were heard at a hearing earlier this week.
While Biden’s concerns about the Supreme Court’s leanings echo those of many court observers, an adverse ruling against the administration is far from guaranteed. Here’s what borrowers need to know.
What Went Down at the Supreme Court Hearing on Student Loan Forgiveness
A clear majority of the court expressed varying degrees of skepticism that Biden’s student loan forgiveness program is legal during Tuesday’s hearing.
The Biden administration relied on emergency authority under the HEROES Act of 2003 to enact the initiative. This statute provides fairly sweeping authority for the Education Department to “modify” or “waive” nearly any provision governing federal student loan programs, including those pertaining to loan discharge and loan forgiveness, in response to a national emergency (such as a pandemic). But several justices thought Biden may have gone too far.
Supreme Court justices express concern
Justice Brett Kavanaugh seemed to speak for many on the court’s conservative majority that, “some of the best moments,” in the Supreme Court’s history involved pushing back against emergency authority exercised by a president, such as in two cases cited during the hearing. These two cases that were cited include when the Court struck down the Trump administration’s efforts to end the “Dreamers” program for undocumented immigrant children, and when it struck down the Biden administration’s efforts to impose an eviction moratorium through the Centers for Disease Control. And some of the Court’s worst moments, Kavanaugh argued, were when the Court failed to act.
Chief Justice John Roberts offered some of the sharpest critiques of Biden’s plan, arguing that the Court should clearly have a say over a matter of such importance and one that, “presents extraordinary concerns,” about the separation of powers between Congress, the Executive branch, and the judiciary.
Three other conservative justices — Samuel Alito, Clarence Thomas and Neil Gorsuch — all expressed varying degrees of reservations about the legality of the program, parsing the meaning of the words “modify” or “waive,” as used in the HEROES Act, and trying to discern Congress’s intent in 2003.
Justice Kavanaugh had some of the most intriguing exchanges with Solicitor General Elizabeth Prelogar, representing the Biden administration. At one point, Kavanaugh suggested it was problematic that the HEROES Act did not specifically authorize student loan forgiveness or cancellation in the statutory text. But he seemed to concede that the ability to “waive” or “modify” nearly “any” provision of existing student loan programs could encompass student loan forgiveness or discharge, as Prelogar argued.
Thus, while a clear majority of the Court appeared hostile to Biden’s program, that hostility was on a spectrum, and it was nuanced. That means that an adverse decision is not necessarily a sure thing.
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Dispute Over Standing Could Save Biden’s Student Loan Forgiveness Program
Whether a majority of the Supreme Court believes that the Biden administration exceeded Congressional authority by enacting the student loan forgiveness plan may ultimately not even matter, however. That’s because there was a second central issue in dispute at the hearing — the issue of “standing.” And that issue alone could determine the outcome.
What is standing?
“Standing” is a legal concept that a party bringing a legal challenge in federal court must be able to show that they would suffer a specific, concrete harm as a direct result of the challenged policy.
A party can’t bring a suit on behalf of someone else. For example, you can’t file a lawsuit because a federal action would harm your neighbor; you have to be harmed (otherwise, the neighbor has to be the one to file the suit). Similarly, the alleged harm cannot be too speculative or vague; it’s not enough to say that maybe, at some point down the line, you could potentially incur some sort of cost or injury as a result of the action, and there must be some sort of clear remedy that would address the alleged harm.
Is there standing?
The Biden administration has argued that none of the challengers in the two student loan forgiveness cases before the Supreme Court can demonstrate standing. In one case, a group of Republican-led states is arguing that Biden’s plan would harm MOHELA, an independent state agency that services and guarantees federal student loans. But MOHELA is not a party to the lawsuit and was established by the state of Missouri to be largely financially and legally independent of the state.
In the second case, two borrowers who would have received a lower amount of student loan forgiveness — or none at all — argued that they were harmed because they weren’t allowed to participate in a public comment process.
A public comment period is typically required when the government wants to enact a new initiative or change existing federal regulations, but it’s not required specifically under the HEROES Act’s emergency authority. The Biden administration argued that these borrowers could not demonstrate that they were harmed or that the remedy — striking down the program entirely for everyone — makes any sense.
Supreme Court justices arguments on standing
Four Supreme Court justices suggested at the hearing that they agreed with the Biden administration’s arguments on standing. In addition to the three liberal justices (Justices Elana Kagan, Sonia Sotomayor, and Ketanji Brown Jackson), Justice Amy Coney Barrett (a Trump appointee) seemed highly skeptical that the parties had standing. Justice Barrett grilled the challengers on the seemingly sparse financial and legal relationship between Missouri and MOHELA, and asked why MOHELA was not a party to the proceedings, if they were, in fact, harmed by Biden’s plan.
There seemed to be broader agreement among the justices that there were major standing problems in the second challenge involving the two borrowers.
While the Chief Justice, as well as Justices Alito and Thomas, seemed more comfortable with the concept that the GOP-led states could have standing, Justices Kavanaugh and Gorsuch said much less on this particular issue, and so, were difficult to read. If Barrett joins with the three liberal justices to rule that the challengers don’t have standing, just one more justice would need to join them for the Supreme Court to effectively uphold Biden’s student loan forgiveness plan — without even reaching the issue of whether the plan was an improper exercise of executive authority under the HEROES Act.
Biden Administration Maintains That the Student Loan Forgiveness Program is Legal
Notwithstanding Biden’s comments on Wednesday, the administration has maintained confidence that the program is legal.
“The Biden-Harris Administration mounted a powerful defense before the U.S. Supreme Court on our plan to provide targeted, one-time student debt relief to more than 40 million working- and middle-class Americans as they recover from the pandemic,” said Education Secretary Miguel Cardona earlier this week. “The Department of Justice argued against the lawsuits aimed at denying relief to borrowers, made clear that challengers to the program lack standing to even bring their cases to court, and explained the Department of Education’s decades-old authority used by multiple administrations to protect borrowers from the effects of national emergencies.”
In a subsequent email sent to millions of student loan borrowers, Cardona said, “Our Administration is confident in our legal authority to adopt this plan… While opponents of this program would deny relief to tens of millions of working- and middle-class Americans, we are fighting to deliver relief to borrowers who need support as they get back on their feet after the economic crisis caused by the pandemic.”
The Supreme Court is expected to issue a ruling by June.
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