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Student debt relief appeal could set standard for presidents yet to come

The White House has urged the Supreme Court to clear out the hurdles against student debt relief so that loans will not enter default. 

WASHINGTON (CN) — President Joe Biden’s student loan forgiveness program goes before the Supreme Court next week, setting the stage for a major precedent on administrative authority, but a standing issue might ground the suit before it gets off the runway. 

“If you take all of the fancy arguments away, the real claim is a taxpayer-standing kind of claim — that people feel this is not a good use of taxpayer dollars — and the court has rejected taxpayer standing in all but a small little sliver of cases now for decades,” Frederick Lawrence, a distinguished lecturer at Georgetown Law, said in a phone interview.

Six Republican-led states are attempting to block Biden’s forgiveness of billions of dollars in student loan debt from American borrowers by way of a 9/11-era law. The states advance a number of theories to claim the program will cause them harm, but whether these theories will meet the standard of Article III standing is unclear.

“The whole idea of not permitting taxpayer standing in court is that if you have a problem with some law or some regulation — if you don't like the law — you should vote for somebody different in the next election,” Lawrence said. “If you don’t like the regulations, you vote for somebody different in the next presidential election. But you can't litigate that in court, so I think it's going to be a tough argument for standing. And it could be that's the off-ramp that the court takes without having to address the merits.”

If the court were to endorse the states’ theory of standing in the case, legal scholars warn it would further encourage suits against every executive action. In a 2007 ruling known as Massachusetts v. EPA, the court gave Massachusetts “special solicitude” in the standing analysis to bring its suit. Experts argue states have taken this ruling to grant extreme theories of standing. 

“The states’ more extravagant theories are emblematic of the broader trend where states are taking advantage of vague language in Massachusetts v. EPA to challenge any federal action with which they disagree,” constitutional law professors Samuel Bray and William Baude told the court in an amicus brief.  “Unless this Court wishes to sit in constant judgment of every major executive action — which is not its constitutional role — it is time to say ‘stop.’”

Biden announced his plan last summer to forgive up to $20,000 in student loans from low-income borrowers. The program uses authorizations under the Higher Education Relief Opportunities for Students Act of 2003. Intending to prevent borrowers from facing dire financial hardship in times of war or national emergency, the Heroes Act allows the education secretary to cancel student loan debt from some borrowers. The law was originally enacted with the 9/11 terror attacks in mind, but Biden contends that the Covid-19 national emergency also qualifies because of the business disruptions caused by the pandemic. 

Republican-led states argue the Heroes Act was never intended for this purpose. Most groups were unable to establish standing to halt Biden’s actions, but the red states in this case obtained a preliminary injunction from the Eighth Circuit

The lower court pause led the Biden administration to appeal to the Supreme Court. Declining to lift the lower court pause, the justices agreed to hear oral arguments in the case to decide if the states have standing to bring the suit and if the Biden administration's use of the Heroes Act was above board. 

Two student loan borrowers are also challenging Biden’s student debt forgiveness plan. Myra Brown and Alexander Taylor both fail to meet some qualifications for the program and claim they should have had the opportunity to provide the administration with their comments on the plan. The borrowers’ suit was advanced not under the injury Brown and Taylor claimed, but because the judge felt Biden’s use of the Heroes Act exceeded the secretary’s authority. 


U.S. Solicitor General Elizabeth Prelogar warned the court about the number of student borrowers who would default on their loans if Biden does not forgive their debt.

“The Secretary determined, and respondents have not seriously disputed, that ending that pause without providing some additional relief for lower-income borrowers would cause delinquency and default rates to spike above prepandemic levels,” Prelogar wrote. “This Court should not compel that damaging and destabilizing result: Respondents do not have Article III standing, and the Secretary’s plan is lawful in any event.” 

The Biden administration notes it was former Secretary of Education Betsy DeVos who first invoked the Heroes Act in 2020 to pause student loan repayments. Estimates for the repayment pause have hit $102 billion since the beginning of the pandemic. Biden argues this negates the states’ argument that the size of his debt forgiveness program disqualifies it. 

One of the chief architects of the Heroes Act, former Representative George Miller, filed an amicus brief supporting the government’s position. Miller contends the Heroes Act specifically permits the education secretary to use their authority to make sure federal student aid recipients affected by national emergencies are not put in a worse position financially. 

The Heroes Act was originally supposed to expire in 2005 but Congress extended it for an additional two years and then made it permanent in 2007. Miller says these actions show Congress’ intent to protect borrowers from military emergencies, national disasters and other unforeseen issues. 

“Secretaries across administrations have used that authority on several occasions, both before and during the COVID-19 pandemic,” Miller’s brief states. “Thus, far from cabining the Secretary to ‘relatively narrow[]’ action, the Act confers significant authority on the Secretary to ease the burdens on borrowers who have been affected by unexpected national emergencies. And that is exactly what the Secretary has done here.” 

The states argue Biden’s actions mark just another unlawful use of emergency authority under Covid-19. Noting the court’s ruling that halted the CDC’s eviction moratorium and OSHA’s vaccine-or-test mandate, red states ask the court to stop Biden from executive overreach. 

“The Program places an estimated 43 million borrowers in a better position by eliminating all loan balances for 20 million and erasing up to $20,000 for over 20 million more,” James Campbell, Nebraska solicitor general, wrote in the states’ brief. “This vastly exceeds the Secretary’s authority under the Act, and the Court should affirm the Eighth Circuit’s decision to enjoin the Program.” 

Campbell says the congressional authorization of the Heroes Act never contemplated putting borrowers in a better position. 

“The Government has not shown colorable — let alone clear — congressional authorization for the Program,” Campbell wrote. 

Opponents of Biden’s plan argue he is abusing his pandemic emergency powers to achieve a long-time Democratic goal, but experts say it’s not clear this argument will succeed if the justices agree Biden did have authority under the national emergency to cancel loans. 

“Every administration takes advantage of opportunities and circumstances provided to do things that are long-term priorities,” Lawrence said. “The only relevant question is whether or not there is sufficient statutory authorization to back these regulations by the Department of Education. If there is authorization, then it doesn't matter whether they wanted to do it for 100 years or never thought about it before.” 

While Massachusetts v. EPA might play into the justices’ ruling on standing in the case, West Virginia v. EPA could impact the merits questions. Last term the justices curbed the Environmental Protection Agency’s authority to regulate greenhouse gas emissions at coal-fired power plants using the major questions doctrine. This ruling created a precedent for executive agencies needing explicit congressional authorization for “major” actions with large economic and political significance. 

The justices’ requirements for what constitutes a “major” action are yet to be completely defined, but some experts think this case could provide more insight. 

“The lesson of West Virginia v. EPA is that the grant of authority from Congress to an administrative agency has to be clear,” Lawrence said. “So the government will argue this was a clear grant of authority. If the court says this is not a clear grant of authority, I guess what future congresses have to do is to make it even clearer.” 

If the court were to say Congress did not clearly authorize the Heroes Act to give this authority, experts say it would place a limit on executive authority and change how the government operates. 

“That will be a fundamental change in the way in which we've operated our country for the past three-quarters of a century,” Lawrence said. “So if that's the direction the court goes, that would be a quite radical change in how the government operates.” 

Categories:Appeals, Consumers, Education, Financial, Government, Law, National

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