WASHINGTON — For those waiting for their student loans to disappear after applying last fall to a new government loan forgiveness plan, answers may be coming soon.
The Supreme Court will hear arguments on Tuesday on cases challenging President Joe Biden’s plan to forgive billions of dollars in student loans.
The plan, which Biden initially announced on Aug. 24 of last year, promised to cancel up to $10,000 for individuals with incomes under $125,000 a year, or households earning under $250,000. Pell Grant recipients could get an additional $10,000. The Department of Education’s announcement was quickly followed by various lawsuits seeking to block the loan forgiveness.
The Biden Administration’s plan, if not thrown out, would forgive debts from an estimated 16 million borrowers who have already been approved, in addition to millions of others. Repayment on student loans continues to be paused until 60 days after a decision if the case is reached or June 30.
Justices will consider the legal standing of plaintiffs to challenge the Department of Education’s plan, as well as considering whether the plan falls within the authority of the secretary of education across two consolidated cases, Biden v. Nebraska and Department of Education v. Brown.
Justices face two questions in this case, looking at the legal standing and the authority to establish the plan, Luke Herrine said, a law professor at the University of Alabama with specializations in student loan law and administrative law.
Do the plaintiffs, like Nebraska and Myra Brown, have legal standing, as those alleging to be directly harmed by Biden’s plan, to sue in this case?
Does the secretary of education of authority have the power to forgive these loans?
Herrine said that without the Supreme Court finding legal standing, they cannot decide on the merits of the plan.
“Standing basically asks, ‘Are the people who are suing actually harmed by the alleged actions of the defendants and can the court take action to redress that harm?’” Herrine said.
The plaintiffs in Biden v. Nebraska include Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. In Department of Education v. Brown, two student loan borrowers who did not qualify for the program sued the administration’s Department of Education.
Herrine said that in this case, that means that the court must decide whether the loan forgiveness plan actually harms the students or any of the states named in the lawsuit and whether action the Supreme Court takes could right those harms.
For Biden v. Nebraska, one state stands out as having the best case for legal standing: Missouri. The state alleges that the program will financially harm the Missouri Higher Education Loan Authority by reducing the number of borrowers, which could reduce the amount they contribute to a state scholarship fund or harm Missouri financially.
For Herrine, the case for the students in Department of Education v. Brown to have been harmed is far-fetched.
“The harm is that [the students] don’t qualify for the program, not that they are actually made worse off by the program,” Herrine said. “That’s outside the normal range of people who are given standing.”
If the Supreme Court upholds the student loan forgiveness plan by dismissing the legal standing claims, the administration could face future lawsuits by other plaintiffs who allege to have stronger claims that they were hurt by the program.
Herrine said plaintiffs with better standing claims could be hard to find.
“There is a reason standing is an issue in this case,” Herrine said. “The question it asks is: ‘Is anybody harmed by this?’ If it’s hard to find somebody who was harmed by this action, I think that tells you a little something.”
Justices would have to decide on the questions of standing and find at least one plaintiff’s claim valid before moving on to considering the merits of the plan—whether the secretary of education overstepped his authority.
The Department of Education’s authority to enact this plan stems from the HEROES Act of 2003, which gave the secretary of education the power to “waive or modify any statutory or regulatory provision,” as the HEROES Act states, related to federal student loan programs in connection to a national emergency, according to the Biden administration.
This legislation also served as the basis for many aspects of pandemic-related aid under both the Biden and Trump administrations.
Plaintiffs and many conservatives argue that the student loan forgiveness plan goes too far based on the general language of the legislation. Some argue that the administrative decision was deciding something too major that should be dealt with by Congress.
Elaine Parker, president of the Job Creators Network Foundation, a conservative organization connected to the owner of Home Depot, Bernie Marcus, that has expressed support to plaintiffs, agreed. She said that Congress should play the part in making loan forgiveness plans, rather than the Department of Education.
“President Biden’s student loan forgiveness program is unlawful because it ignored the clear and explicit procedures Congress has laid out for loan forgiveness,” Parker said.
Critics also argue that the HEROES Act aims to protect people from becoming “worse off” due to a national emergency, but that the Biden loan forgiveness plan goes too far and makes people better off rather than just not worse off. The critics say a more appropriate use of the law would have been to pause interest payments on loans instead of reducing the amount of loans.
Experts say that the Conservative justices, who make up the majority in the Supreme Court, may again rely on a legal doctrine that takes a narrow view of how much authority federal agencies have, known as the major questions doctrine.
The Supreme Court in 2022 started citing the major questions doctrine as a reason to strike down agency actions, including in recent cases like West Virginia v. Environmental Protection Agency, which struck down air pollution regulations announced by the EPA. The idea is that these actions are so major that they should be reserved for Congress.
“The Supreme Court has declared that if an agency seeks to decide an issue of major national significance, its action must be supported by clear congressional authorization,” a report from the Congressional Research Service about the doctrine said.
Herrine believes that if the case makes its way past the question of legal standing, the major questions doctrine could be employed by conservative justices.
“Over the past few years, the Supreme Court has been increasingly skeptical of any administrative decision and especially administrative decisions of some great consequence,” Herrine said. “This is basically the strategy of the conservative majority to whittle away the powers of the administrative state to do anything useful.”
The conservative justices will likely try to minimize controversy and set useful precedent when deciding this case’s opinion, Herrine said, whether that includes the major questions doctrine or not.
Scott Buchanan, the executive alliance of the Student Loan Servicing Alliance, said that the plan could reduce the costs paid to loan servicers. Servicers are companies that interact with students who have taken out federal loans, sending mail and emails regarding the debt, and are paid fees by the federal government. Companies are paid a monthly fee based on borrowers, rather than debt amount, so reducing the number of borrowers through forgiveness would reduce the total fees.
Buchanan said that the organization of loan services has not taken a position on the case or the Biden administration’s plan.
“Spending enormous federal resources on this kind of program is something that needs to be thought about very carefully because it’s taking away resources that can be used to help those most in need but also those future students,” Buchanan said.
Buchanan said that a widespread forgiveness program is unprecedented and future students should not expect the same help.
Even if the plan is struck down in the Supreme Court, Herrine said the Biden Administration could have other options.
The Department of Education could forgive loans using the “compromise authority,” which allows them to settle debts regularly on a case-by-case basis.
Herrine says, however, that this would likely also be challenged by lawsuits immediately.
If broad student loan forgiveness does not come through, Buchanan said to not lose hope.
Buchanan said that borrowers facing significant challenges in paying off debts should turn to programs already available to them. The public service loan forgiveness program, which requires repayment for a set amount of time before debt forgiveness for public employees, could provide relief for some.
“It’s also important for people to remember that regardless of how that case shakes out if people are in actual distress financially or have really high debt there are already programs that we’ve had for years to put people on a path to forgiveness,” Buchanan said. “That’s what we’ve been trying to work with Congress and the Department of Education to make it easier.”