Rule of Law

Supreme Court hears arguments over student loan forgiveness plan

Millions of Americans — and nearly half a million of them from Alabama — are waiting for the US Supreme Court to decide the fate of their federally issued student loan repayments after justices heard oral arguments from both sides of two lawsuits aiming to end President Joe Biden’s plans to forgive $400 billion for qualifying students.

Shortly after declaring the Covid-19 pandemic a national emergency, the administration of former President Donald Trump place a suspension on the repayment and the accrual of interest of all federally issued student loans by utilizing the Higher Education Relief Opportunities for Students (HEROES) Act of 2003.

Just before the mid-term elections in August, the Biden Administration cited the same law, which grants the Department of Education the power to “waive or modify” student financial assistance programs in response to national emergencies, when announcing its Debt Relief Plan that would forgive $10,000 — $20,000 for Pell Grant recipients — in student loan debt for an estimated 43 million qualifying individuals. Since that time, 26 million Americans — 371,400 from Alabama — have either applied or were automatically found to be eligible for loan forgiveness.

The Biden administration announced on Jan. 31 that it plans to end the state of emergency on May 11 and fears without this debt relief, defaults and delinquency rates would surge to pre-pandemic levels, but two separate lawsuits threaten to halt the President’s plan.

On Tuesday, Feb. 28, Supreme Court justices were presented with the oral arguments in both cases against the administration — one from six conservative led states (Arkansas, Iowa, Kansas, Missouri, Nebraska and South Dakota), and the other from students Alexander Taylor and Myra Brown who are backed by the conservative advocacy organization The Job Creators Network Foundation

The states claim that the president overstepped the boundaries of his executive powers by enacting his plan without receiving approval from Congress, causing Chief Justice John Roberts to bring up the judicially created concept of the major questions doctrine. In a previous opinion issued by Roberts, he described this concept as a means to address “a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonable be understood to have granted.”

The Court cited the major questions doctrine last year in blocking Biden’s Covid vaccination or test requirement for larger businesses, and limiting the authority of the Environmental Protection Agency to limit carbon emissions from power plants. Roberts said that the economic impact the relief bill would have would justify the court to consider the use of this concept once again.

“Most casual observers would say if you’re going to give up that much amount of money, if you’re going to affect the obligations of that many Americans on a subject that’s of great controversy, they would think that’s something for Congress to act on, and if they haven’t acted on it, then maybe that’s a good lesson to say for the president or the administrative bureaucracy that maybe that’s not something they should undertake on their own,” Roberts said.

The administration argues that it already received congressional approval with the passing of the HEROES Act. The Constitutional Accountability Center agreed with this interpretation in a brief filed in the Supreme Court on behalf of Rep. George Miller — a co-sponsor of the HEROES Act. In the brief, they allege that when Congress approved the act, it “planned to give the Secretary of Education broad discretion and flexibility to protect student loan recipients from military emergencies, national disasters, and an ‘unforeseen issues that may arise.’”

Prelogar continued arguing against this point by referring to the initial payment suspension issued by Trump. As of April, the payment suspension — set to end later this summer — has cost the government as much as $100 billion, according to the Government Accountability Office.

“That has been an economically significant program,” Prelogar said. “It’s currently costing the federal government more per year than this loan forgiveness plan would cost the government annually.”

Taylor and Brown claim is they were deprived of the opportunity to give any feedback on the plan and as a result are being wrongfully deprived from receiving the total relief amount. Brown does not qualify for any relief due to her loans being issued by a commercial lender instead the federal government, and Taylor only qualifies for $10,000 instead of the full $20,000 since she was not a Pell Grant recipient.

Justice Samuel Alito raised the question of whether the president’s plan was fair to not just students, but anyone who will not be offered a similar amount of financial relief.

“Why was it fair to the people who didn’t get arguably comparable relief, not maybe that their interests were outweighed by the interests of those who were benefited or they were somehow less deserving of solicitude,” Alito asked.

Both cases will have to prove that they stand to be negatively impacted by the debt relief program. To do this, the stated argument points to the Missouri Higher Education Loan Authority (MOHELA) — a state created entity — to justify their standing.

Justice Elana Kagan seemed to be skeptical of this argument and raised the question of why MOHELA didn’t challenge the program itself.

“Usually, we don’t allow one person to step into another’s shoes and say, ‘I think that that person suffered harm,’ even if the harm is very great,” Kagan said. “So why isn’t MOHELA responsible for deciding whether to bring this suit?” She later added that the state of Missouri was so far removed from MOHELA that an open-records request had to be filed in order to obtain the records the state needed for its lawsuit.

In its Supreme Court brief, the administration says that the plaintiffs in both cases lack sufficient grounds to sue. In regard to the states, the brief says that any asserted injuries were either speculative of self-inflicted and that the individual borrowers would gain nothing from a ruling in their favor.

In regard to Brown and Taylor, the brief said that a favorable ruling “would not grant Brown and Taylor the additional debt relief they say they desire; rather, it would mean that nobody gets any debt relief at all.”

By determining that the plaintiffs did not have sufficient grounds to sue, the Court would ultimately allow the program to continue without having to issue a ruling on its legality.

A decision for both cases is expected sometime in June.