Supreme Court Skeptical of Biden’s Student Loan Cancellation Plan

WASHINGTON – The Supreme Court’s conservative majority appeared Deeply suspicious The legality of the Biden administration’s plan to wipe out more than $400 billion in student loans on Tuesday grew as judges struck down efforts to forgive tens of millions of borrowers’ loans.

Chief Justice John G. Roberts Jr. noted that the administration acted without sufficient express congressional authorization to undertake one of the most ambitious and expensive executive actions in the nation’s history, in violation of separation of powers principles.

“I think most ordinary observers would say,” the chief justice said, “if you’re going to give up that much money, if you’re going to jeopardize the obligations of so many Americans over a big controversy, they’d think it was something for Congress to do.”

The court’s three liberal members said Congress had already acted by passing a law in 2003 authorizing the secretary of education to resolve emergencies.

“Congress couldn’t have made it any clearer,” said Justice Elena Kagan, adding: “Every day we see congressional laws getting really confusing. This isn’t it.”

At the end of roughly three and a half hours of arguments in two separate cases, the court’s conservative majority looked set to shatter the confidence of the 26 million borrowers who have already applied for debt relief. If the administration were to prevail, it might be on the basis that neither plaintiff sued in either case, but that outcome doesn’t seem likely either.

The chief justice, who joined the court’s six-member conservative majority, emphasized the “critical questions doctrine,” which requires government initiatives with major political and economic consequences to be expressly authorized by Congress.

There was a consensus that the loan forgiveness program was largely qualified.

“We’re talking about half a trillion dollars and 43 million Americans,” Chief Justice Roberts said, referring to the number of borrowers affected. Judge Samuel A. Alito Jr. said the ordinary colloquial meaning of “key questions” includes “what the government proposes to do with student loans.”

Even Justice Sonia Sotomayor, a liberal, said the amounts involved were legally significant. “It supports the argument that it’s an important question,” he said.

The administration was spurred into action by the pandemic and its lingering effects. The law the administration relied on, the Higher Education Relief Opportunities for Students Act of 2003, commonly known as the HEROES Act, gives the education secretary the power to “waive or modify any statutory or regulatory provision to protect borrowers affected by a war.” or other military action or national emergency.”

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Chief Justice Roberts and Justice Clarence Thomas were skeptical that the words “exclude or modify” allowed for absolute repeal. “It does not purport to transfer or write off the arrears,” the chief justice said.

Judge Brett M. Kavanagh said, “Congress may have mentioned debt cancellation and debt forgiveness in 2003, but they weren’t in the legal text.”

Later, however, Judge Kavanagh described “waiver” as “a very broad term,” saying that “in 2003, Congress was very much aware of possible emergency measures after September 11.”

Representing the administration is Solicitor General Elizabeth B. Preloger said its plan fits comfortably within the statutory language, which it said gave the education secretary the authority to act. “The whole point of this legislation, its central mission and function, is to make sure that the secretary can do something when faced with a national emergency that could cause financial harm to borrowers,” he said.

Ms. Preloger noted that the Trump administration also relied on the 2003 law.

In March 2020, President Donald J. Trump declared the coronavirus pandemic a national emergency, and his administration implemented the HEROES Act to suspend student loan repayment requirements and stop accruing interest.

The Biden administration followed suit. As of April, the suspension of payments had cost the government more than $100 billion, according to the Government Accountability Office.

“This is an economically significant project,” Ms. Priloger said of the suspension. “This loan forgiveness program is currently costing the federal government more annually than what it costs the government annually.”

In August, the administration said it planned to end the repayment freeze, but forgive $10,000 in loans for low-income households with loans up to $125,000 or $250,000 per year, or $20,000 for low-income families who receive Pell grants. The nonpartisan Congressional Budget Office estimates 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 individuals sued to stop the new program, relying on recent decisions using the vital questions doctrine.

In June, the Supreme Court applied the doctrine in a decision to reduce the Environmental Protection Agency’s authority to address climate change. Without “express congressional authorization.” The court saidThe agency is unable to act.

On similar grounds, the court ruled that the Centers for Disease Control and Prevention is not authorized to ban layoffs and that the Occupational Safety and Health Administration does not have the authority to require large employers to vaccinate their workers against Covid-19. Or test more often.

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The first question in both cases is whether the plaintiffs have suffered a direct and tangible injury.

The point of the standard doctrine, Justice Ketanji Brown Jackson said, “is to allow the political branches to get this out without interference, you know, from cases brought by states and corporations and individuals who have no real personal. stake in the outcome.”

Much of the argument focused on the Missouri Higher Education Loan Authority, also known as MOHELA, a nonprofit agency that issues federal loans. Challengers argued that its potential losses from the loan forgiveness program were sufficient to sustain Missouri’s status as a state. They also argued that if the project were allowed to proceed, the authority would fail to pay Missouri.

Justice Kagan said it is important to note that the credit commission itself did not prosecute the loan forgiveness scheme.

“Usually we don’t allow a person to step into another person’s shoes and say, ‘I think that person caused harm, even if the harm is enormous,'” he said.

If Missouri actually controlled the borrowing power, Nebraska’s Solicitor General James A. Campbell asked, “Then why didn’t the state make Mohela come?” asked Judge Amy Coney Barrett.

It is “a question of state politics,” said Mr. Campbell said.

Ms. Preloger agreed that it would have stood if the credit authority had chosen to sue in her own name. But that didn’t happen, and Missouri doesn’t have the right to sue on its behalf, he said.

Justice Jackson said the authority was independent of the state.

“Its financial interests are completely separated from the state, it is separate, it is separately incorporated, the state is not responsible for anything that happens to MOHELA,” he said. “I do not see how that can be a reason to say that the injury to Mohela should be treated as an injury to the State.”

Given the willingness of conservative justices to question the program’s legality, if the administration is to succeed, it may have to do so on a standing question. But there is little evidence that conservatives specifically adopted the administration’s position on that issue in the first place, Biden v. Nebraska, no. 22-506.

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The second case, Department of Education v. Brown, no. 22-535, brought by two creditors, Myra Brown and Alexander Taylor, also raised questions of standing. Ms. Brown is ineligible for relief under the scheme because her debts are with businesses rather than the government, while Mr. Taylor is eligible for $10,000 instead of $20,000 because he did not receive a Pell grant.

A trial court ruled that they could sue because they lost an opportunity to press the administration to expand the program to provide more debt relief.

Judges across the ideological spectrum were unconvinced by the borrowers’ position.

“Talk about the ways in which courts can interfere with the processes of government through two individuals in one state, and those who don’t like the program can seek and obtain a universal remedy for anyone anywhere,” said Judge Neal M. Gorsuch said.

If the Supreme Court rules that at least one plaintiff must have standing in a case, it will decide whether the loan forgiveness program is legal.

Many judges used the second argument to make points about the scheme, with some saying it was unfair and overly vague.

“Didn’t half of borrowers say they wouldn’t have trouble paying off their debt regardless of the forgiveness plan?” Chief Justice Roberts questioned.

Ms Preloger said it was difficult to separate the two groups and the moratorium on loan repayments applied to all borrowers.

The Chief Justice then asked if it meant forgiving loans taken by students but not loans taken by a young man starting a lawn care business.

“I may have opinions as to the fairness of that, and mine will not count,” said Chief Justice Roberts. “Usually we want to leave situations like this, and you’re talking about spending government money, taxpayer money, on people who are responsible for Congressional money.”

Judge Sotomayor responded, “Everyone was affected by the epidemic, but different people received different benefits because they qualified under different programs.”

Justice Kagan also addressed the Chief Justice’s concerns. “Congress passed legislation on debt repayment for colleges, and it didn’t pass legislation on debt repayment for grassroots businesses,” he said. “So Congress made a choice, and it might have been the right choice or it might have been the wrong choice, but that was the choice of Congress.”

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