Six States Challenge Student Loans Relief Proposal in Supreme Court

Joe Ramlet, opinions editor

The U.S. Supreme Court heard back-to-back oral arguments on Feb. 28 over the legality of President Joe Biden’s student loan relief program. Biden v. Nebraska and Department of Education v. Brown are cases filed by six states and student loan borrowers, respectively, arguing that the proposal to forgive up to $20,000 of federal student debt is an overreach of executive power. Lower courts previously put the program on hold, giving reason for the high court to take up the issue.

The Biden administration relied on the Higher Education Relief Opportunities for Students Act of 2003, or HEROES Act, to make their case, which was enacted in the wake of the 9/11 terrorist attacks to allow the Education department to “waive or modify any statutory or regulatory provision” of student loans in a “national emergency.” Former President Trump used the same law to suspend payments on student loans at the outset of the COVID-19 pandemic. Even so, liberal and conservative justices alike had many questions for the attorneys representing the parties in these cases. NPR reported that during the arguments, Chief Justice John Roberts remarked the law “doesn’t say modify or waive loan balances,” but Justice Elena Kagan said, “We deal with congressional statutes every day that are really confusing. This one is not.” Justice Brett Kavanaugh seemed to agree with Kagan, describing “waive” as “an extremely broad word.”

The main legal question is whether the Republican-led states suing — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — have standing, or have suffered actual harm. States argued that loan forgiveness would cause the Missouri Higher Education Loan Authority to default with the state treasury because of lost revenue from servicing federal student loans. MOHELA is an independent corporation, but created by the state, to hold and service student loans for borrowers, and it has explicitly said it’s not involved in the lawsuit. The states have to convince the Court of the inevitable likelihood of harm if the plan were to continue, since standing depends on actual injury and not hypotheticals.

Elena Kagan and Amy Coney Barrett, both associate justices, questioned the states why MOHELA didn’t join in the suit. The New York Times reported that Kagan said, “Usually we don’t allow one person to step into another’s shoes and say, ‘I think that that person suffered a harm,’ even if the harm is very great,” while Coney Barrett asked, “Why didn’t the state just make MOHELA come?”

The outcome of these cases will have far-reaching impacts. If the Court decides to allow the plan, then the $400 billion of relief would reach an estimated 43 million borrowers. At the same time, siding with the administration would overturn the 2007 decision of Massachusetts v. Environmental Protection Agency, which gave states “special solicitude” in court. It would put an end to what has been a trend growing since the Obama administration: States challenging federal laws and programs for political posturing. Recent examples of this include rulings that the Centers for Disease Control and Prevention could not pause evictions and that weakened the EPA’s power against climate change.

Despite a strong showing by the Biden administration, the Supreme Court ruling against the plan seems likely, given its 6-3 conservative majority. The Court gives no definitive answer on when to expect rulings in any of their cases, but experts such as at CNBC are suggesting that justices will release the decisions and their opinions sometime around June of this year. Until then, speculation abounds.