Evan Vucci/AP Photo
President Joe Biden greets Delaware State University students after speaking about student loan debt relief at the university on October 21, 2022, in Dover, Delaware.
On February 28, the Supreme Court will hear oral arguments in two cases challenging the Biden administration’s student debt cancellation program. Conservative appeals courts have made increasingly absurd justifications against the program in these cases, and it wouldn’t be a stretch to expect that the just-as-conservative Supreme Court will follow that approach, grabbing at any legal rationale to deny student debt relief to millions of borrowers.
But late on Wednesday, the government filed its brief in the student debt case, and while it’s wise to be realistic about the Roberts Court, the White House believes that they have a real shot at convincing a majority of justices that eliminating student debt relief would be worse—and specifically worse for the conservative legal project—than letting it pass through.
The first of the two consolidated cases involves two students who didn’t qualify for full relief. They argue that they were denied a notice and comment period, where they could have made their case for additional benefits for themselves. This, they say, gives them standing—the legal threshold for a plaintiff to have shown enough harm to be able to file suit.
These arguments are open-and-shut absurd for many reasons. The law that the government based its authority on, the HEROES Act of 2003, explicitly does not require notice and comment. In fact, the conservative federal judge who sided with the plaintiffs in that case acknowledges that in his own ruling. In addition, the two students, who are fronts for an ideologically conservative group called the Job Creators Network, argue that the remedy for not receiving enough debt relief should be abolishing the entire program. To say that his doesn’t logically follow is an understatement, and the administration’s brief points this out.
But what could actually trip up the justices is that courts have traditionally not given standing to people who say they should be helped more. If the Supreme Court decided to grant standing, according to a person familiar with the administration’s legal strategy who requested anonymity to discuss the case, that would be likely to increase government benefits. Rules are currently written in very narrow ways, because in current law, the legal risk comes solely from those who say an “undeserving” individual received the benefit. If a new precedent is set, where those who didn’t get enough can sue for more benefits, suddenly rule-writing would become much more generous, in ways that the conservative Court probably doesn’t want.
The second case comes from six states, which claim standing for a variety of reasons. The only one to which the lower courts granted standing, however, is the state of Missouri, which claims that the Missouri Higher Education Loan Authority (MOHELA), a student loan servicer, would lose the ability to service loans that will now be canceled. Missouri argues that MOHELA is an arm of the state, but the administration’s brief explains that MOHELA is a separate corporation, a status that’s been substantiated in numerous legal cases. But even if you don’t buy that, the plaintiff’s theory goes, financial harm to MOHELA would flow to the state, because MOHELA sends some of its proceeds to Missouri to support higher-education grants.
The Supreme Court would have to deny approximately 40 million young people an opportunity to live their lives without debt servitude.
Keep in mind that MOHELA has said in writing that they had no role in bringing the lawsuit; the Eighth Circuit Court of Appeals ruling basing Missouri’s standing on MOHELA essentially turned a non-plaintiff into a plaintiff. But regardless of that, MOHELA only provides a small sum to the state of Missouri, and it’s speculative to say that they will default on this obligation in the event that the debt relief program goes into effect. In fact, MOHELA could end up better off if the debt relief program leads to fewer defaults on the remaining balances of loans, or it could still make enough to pay off Missouri. Traditionally, even the Roberts Court does not grant standing based on such speculative financial outcomes.
The precedent issue is even worse. The Court would be saying that a plaintiff can bring a case based on the claim that someone who owes them money was harmed. The way the administration’s brief puts it is this: “The Eighth Circuit cited no authority for the proposition that, if A causes financial harm to B, and B owes money to C, C has standing to sue A … Taken to its logical conclusion, the Eighth Circuit’s theory would mean that banks could sue anyone who causes financial harm to their borrowers, credit-card companies could sue anyone who causes financial harm to their customers, and governments could sue anyone who causes financial harm to their taxpayers.”
The brief goes on to discuss the merits of the case. The HEROES Act does indeed authorize the secretary of education, in any kind of national emergency, to “waive or modify” student loan obligations, with the goal of making sure that no borrower is made worse off by the emergency. In the past, the HEROES Act has been used not only to pause payments, but to cut principal. It does not have to be applied on a case-by-case basis.
Whether the emergency is ongoing or not is immaterial; when this provision has been used during a natural disaster, as it has many times, it’s not solely operative for the moment that the hurricane, flood, or wildfire is active. The relief is designed to be retroactive. That’s important, because the plaintiffs will surely use Biden’s statement that the pandemic is over to justify blocking relief.
The brief explains that the statute allows the secretary to issue targeted relief to borrowers for whom the resumption of payments would lead to a higher risk of delinquency and default. It just so happens that, on the same day that the brief was issued, the New York Federal Reserve released a staff report about the proposed Biden student debt relief plan. It found that, if student loan payments resume without relief, it would lead to higher default and delinquency rates, as has happened for post-pandemic auto and credit card loans, likely surpassing pre-pandemic levels.
This is the entire point of the HEROES Act, to make sure that disasters like the pandemic don’t make borrowers worse off. Clearly, defaults or delinquencies at higher than pre-pandemic levels would be a worse condition. Restarting payments is precisely the moment when the most harm is imposed, and therefore the right moment to grant relief.
Finally, the brief addresses the so-called “major questions doctrine,” the invented argument conservative jurists have made to nullify agency action, as they did in the West Virginia v. EPA case. The Court said there that an EPA rule on reducing carbon emissions at power plants reflected a “gross mismatch” between the regulatory authority and the congressional authorization. The brief now submitted to the Court argues that the student debt case doesn’t share those features.
“The Secretary’s plan concerns the administration of a federal benefit program and involves no assertion of regulatory authority at all,” the brief states. Plus, HEROES Act authority explicitly gives the secretary the authority to “waive or modify” recipients’ obligations, which is exactly what the plan would do: give discretion to the education secretary to waive or modify student debt in the event of an emergency.
Because the theory of standing that the Court would have to issue would be contrary to traditional Republican interests, and because the textual analysis doesn’t fit with how the major questions doctrine has previously been used, the White House believes it has a legitimate chance in this case. They obviously don’t anticipate a unanimous ruling for them, but they could find just enough support to sway Justices Roberts and Kavanaugh, for example.
The administration had other ways to go about granting debt relief on student loans, but this is the path they chose for a variety of reasons. Whatever method used, there would be a legal challenge, because the opponents cannot stand the idea of the government helping anyone. What’s missing from the brief but hanging in the background is the idea that the Supreme Court, in ruling against the administration, would have to deny approximately 40 million young people an opportunity to live their lives without counterproductive debt servitude. We’ve already seen the outcry from the Dobbs ruling and its impact at the polls on the Republican justices’ preferred politics. Let’s see if they’re willing to pull that trigger again.
