Student loan forgiveness plan on life support at Supreme Court

“There are 50 million students who are going to benefit from this,” the Obama appointee said.

She said the pandemic left many of these borrowers in financial peril that could lead them to default. 

“The evidence is clear that many of them will have to default,” Sotomayor said. “The financial situation will be even worse because once you default, the hardship on you is exponentially greater. You cannot get credit. You’re going to pay higher prices for things. They are going to continue to suffer from this pandemic in a way that the general population doesn’t. And what you are saying is, now we are going to give judges the right to decide how much aid to give them instead of the person with the expertise?” 

Justice Neil Gorsuch questioned if the education secretary considered the costs of Biden’s program beyond loans being forgiven. Gorsuch asked how Biden’s program was fair to people who already paid their loans or those who did not qualify for them. 

“I don’t just mean the numbers but generally the negative effects to the economy, to other people who don’t have this opportunity for that relief,” the Trump appointee said. 

Roberts appeared to think the court should apply the major questions doctrine. Last term the justices created a precedent that forces executive agencies to get explicit congressional authorization for “major” actions that result in large economic and political significance. 

“I just wonder, given the posture of the case and given our historic concern about the separation of powers, you would recognize at least that this is a case that presents extraordinarily serious, important issues about the role of Congress and about the role that we should exercise in scrutinizing that,” Roberts said. 

In an objection to Biden’s use of the Heroes Act to forgive student loans, six Republican-led states sued to halt the program. Claiming that the Biden administration had abused its executive authority throughout the pandemic, the states secured a preliminary injunction from the Eighth Circuit. The high court has already halted the CDC’s eviction moratorium and OSHA’s vaccine-or-test mandate. Now red states are asking the justices to tackle student debt relief. 

U.S. Solicitor General Elizabeth Prelogar noted that the Biden administration was not the only White House to use this authority. Student loans were originally paused under the Trump administration using the same authority, and the states have not challenged that action. Prelogar said Congress intentionally created the Heroes Act to be broad enough to account for emergencies, and the Covid-19 pandemic falls squarely within lawmakers’ intended purpose. 

“Congress expressly authorized the secretary to waive or modify any title for provision in emergencies to provide financial relief to borrowers,” Prelogar said. 

Nebraska Solicitor General James Campbell urged the court to apply the major questions doctrine, contending that Biden’s action aimed at circumventing Congress on a major political question. 

“After many failed legislative efforts, the secretary seeks to write off nearly half a trillion dollars in loans for over 40 million borrowers,” Campbell said. “No statute authorizes this sweeping action.” 

Also challenging Biden’s plan at the Supreme Court on Tuesday were two student loan borrowers — Myra Brown and Alexander Taylor. Brown and Taylor's suits against student debt relief hinge on the administration's failure to provide an opportunity for public comments on the plan. A judge ruled against the borrowers on the notice-and-comment-period claims but advanced the case on claims that Biden exceeded his authority under the Heroes Act. 

The government argued that the borrowers' suit does not align with the relief they seek. 

“They claim to want greater loan forgiveness than the plan provides, but they ask this court to hold that the Heroes Act doesn’t authorize loan forgiveness at all,” Prelogar said. “A win on that theory would mean that no one could get any Heroes Act relief, not Brown — who would get nothing for herself — not Taylor — who would lose $10,000 — and not any of the millions of borrowers who need this critical relief.”

Brown and Taylor pushed back against the government’s argument, saying the administration could invoke the Higher Education Act to still forgive student loan debt if their case proceeds. 

“Respondents need only show that there was some possibility that the relief they seek will prompt the Secretary to forgive their debts,” said John Connolly, an attorney for the borrowers with Consovoy McCarthy. “On that question, there is no debate. Debt forgiveness is a top priority of this administration. The parties agree that the secretary can forgive debts under the Higher Education Act, and the secretary has never denied that he may follow the proper procedures. 

Outside the court, the case drew a large rally ahead of oral arguments in support of loan forgiveness. Lawmakers including Senators Elizabeth Warren and Bernie Sanders and Representatives Ayanna Pressley and Ilhan Omar spoke to demonstrators and urged the justices to uphold Biden’s plan. 

Follow @KelseyReichmann

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