Can Biden forgive $500 billion in student loan debt? Supreme Court hears arguments
The United States Supreme Court will soon determine whether the Biden administration can forgive about $500 billion in student loan debt for more than 40 million Americans.
The Supreme Court heard oral arguments on Tuesday in the cases of Biden v. Nebraska and Department of Education v. Brown, which both center on the student loan forgiveness program announced by President Joe Biden last year. The plan would eliminate $10,000 in student loan debt to individual borrowers earning less than $125,000 or married couples making less than a combined $250,000 a year.
The high court began by hearing arguments in the case of Biden v. Nebraska, with the question centered on whether the states suing the Biden administration have standing to challenge the federal student loan debt relief program.
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U.S. Solicitor General Elizabeth Prelogar argued in defense of the program, citing the Higher Education Relief Opportunities for Students Act of 2003 as a justification for the debt relief.
Known as the HEROES Act, the 2003 law grants the secretary for the Department of Education to “waive or modify any requirement or regulation applicable to the student financial assistance programs under title IV of the Higher Education Act of 1965 as deemed necessary” under certain circumstances.
The expressed justification to provide student loan debt relief under the HEROES Act, according to Prelogar, was the economic upheaval caused by the COVID-19 pandemic.
“The states ask this court to deny that vital relief to millions of Americans, but they lack standing to seek that result,” argued Prelogar.
“They principally assert harm to a separate legal person, [Missouri Higher Education Loan Authority or] MOHELA, that can sue in its own name, but has chosen not to do so, and the states’ asserted harms to their tax revenues are self-inflicted and indirect.”
Chief Justice John Roberts questioned how the debt relief could be justified as simply a modification when “we’re talking about half a trillion dollars and 40 million Americans.”
Prelogar responded that it was acceptable to have a “broader” understanding of “modify” in this circumstance, since it is paired with “waive,” adding that “the states aren’t contesting that the ordinary meaning of ‘waive’ means ‘to eliminate an obligation in its entirety.’”
Justice Samuel Alito asked Prelogar if MOHELA had brought the lawsuit would the administration dispute its standing to sue, to which Prelogar said they would not.
Alito followed up by asking if Missouri could still bring litigation on behalf of MOHELA, with the entity being considered “part of the state for present purposes,” as harm to MOHELA could arguably mean harm to the state of Missouri.
Prelogar disputed this, and was joined by Justice Ketanji Brown Jackson who said that MOHELA’s “financial interests are totally disentangled from the state” and “it stands alone.”
Nebraska Solicitor General James Campbell argued in favor of the states, claiming that the Education Secretary Miguel Cardona was “attempting to bypass Congress on one of today’s most debated policy questions.”
“No statute authorizes this sweeping action,” said Campbell. “Missouri has the right to vindicate the harms to MOHELA. MOHELA is a state-created and state-controlled public instrumentality that performs the essential public function of providing financial aid to Missouri students.”
“The secretary’s program threatens to cut MOHELA’s operating revenue by 40%. That will directly undermine MOHELA’s ability to further its critical public purposes and the state has standing to assert those harms.”
Campbell argued that the HEROES Act has never been used before to “forgive a single loan,” let alone to do so on such a grand national scale as would be seen with the debt relief program.
Justice Elena Kagan disputed the right of the states to bring the suit on behalf of MOHELA, with Campbell responding that MOHELA’s actions constitute “an essential public function.”
Following a five-minute break, the Supreme Court heard arguments in Department of Education v. Brown, in which the question centers on if two student-loan borrowers have standing to challenge the plan believing that the program unfairly treated them.
Michael Connolly, attorney for Myra Brown, argued that the program was “procedurally improper” and went against proper “negotiated rulemaking” and the wishes of Congress.
Justices Sonia Sotomayor and Jackson criticized the Brown lawsuit, arguing that if the plan is struck down, then the two student loan borrowers would get no benefit at all.
“The only way you can win is if you strike down this program completely, and that means that you don’t get an opportunity to be heard, but nobody else does either,” said Sotomayor. “This is so totally illogical to me that you come into court to say, ‘I want more, I’m going to file a suit to get more, but I know I am going to get nothing.’”
Connolly replied that Cardona’s debt relief program was a “one-time” affair, and therefore “if we miss this shot, we will never have another opportunity to get” a fair amount of relief.
Last August, Biden announced that his administration would pursue a plan to forgive student loan debt for college-educated households as part of an effort to fulfill a campaign promise.
The administration cited an analysis from the U.S. Department of Education which stated that the average undergraduate student graduates from college with approximately $25,000 in debt.
Six states, including Nebraska, sued the Biden administration over the debt forgiveness plan, claiming that the plan violated the Administrative Procedure Act and the separation of powers.
In November, a three-judge panel of the U.S. Court of Appeals for the 8th Circuit unanimously ruled against the Biden administration, granting a preliminary injunction against their plan.
Republicans in Congress have raised concerns about the cost to taxpayers who will be paying for this debt relief.
Sen. Bill Cassidy, R-La., the top Republican on the Senate Health, Education, Labor, and Pensions Committee, said in a statement to the Washington Examiner: “This policy before the Supreme Court does not forgive debt. It only transfers it from those who willingly took it on to taxpayers who chose not to go to college or worked hard and made sacrifices to pay off their loans."
However, House Minority Leader Sen. Hakeem Jeffries, D-N.Y., sees it differently. In a post on Twitter, he wrote: "Extreme MAGA Republicans are working overtime to stop us from helping those with student loan debt. Thank you President Biden for your strong and continued commitment to delivering life-changing relief to millions of Americans."
