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Several U.S. Supreme Court justices appeared skeptical Tuesday that a group of Republican-controlled states and two borrowers have standing to file a lawsuit to overturn the Biden administration’s plan to forgive large amounts of federal student loan debt.
Whether this doubt translates into a decision to allow the loan cancellation program to continue is another matter. It was mainly the liberal wing of the court that questioned the plaintiffs’ standing during Tuesday’s oral arguments, but conservatives dominate the high court 6 to 3. Conservatives questioned the legality of the initiative, which a government agency assigned a $400 billion price tag over the next three decades.
Plan, which was unveiled by President Joe Biden in August, would erase up to $10,000 of debt for borrowers making up to $125,000 a year, or $250,000 for married households. Recipients of federal Pell Grants, the primary form of financial aid for low- and moderate-income students, would have an additional $10,000 forgiven.
The legal challenges, which the Supreme Court began to unravel on Tuesday, were brought by six red states, led by Nebraska, which claim financial damage to their tax revenues, and two student loan borrowers who say they could not take full advantage of the plan. They also argue that Education Secretary Miguel Cardona circumvented procedures required by law when devising the debt forgiveness program.
Most of the more than three hours of arguments Tuesday focused on whether the plan would specifically harm the states and the two borrowers, Myra Brown and Alexander Taylor, thereby allowing them to sue.
US Solicitor General Elizabeth Prelogar, arguing on behalf of the federal government, said the answer is definitely no. Legal experts cited the Biden administration’s strategy to protect the debt relief plan was to challenge the position, a more appealing line of reasoning for conservative justices. On the real question of whether the Biden administration has the power to forgive student loan debt without congressional intervention, he is more likely to side with states and borrowers.
For the two borrowers, Brown is not eligible for debt forgiveness under the plan, while Taylor is not eligible for the $20,000 cancellation. But neither debtor would benefit if their challenge were to succeed — which makes the lawsuit irrational if the two debtors are actually seeking more debt relief, Prelogar said.
The liberal justices agreed with Prelogar.
“It’s so completely illogical to me that you come to court and say I want more, I’m going to file a lawsuit to get more, but I know I’m not going to get anything,” said Justice Sonia Sotomayor.
Brown and Taylor further claim that the administration did not give them an opportunity to consider the debt relief program. But the law the Biden administration used to justify debt relief, the HEROES Act of 2003, specifically exempts the education secretary from having to solicit public input, as is typical of major executive branch policy actions.
The HEROES Act gives the Secretary of Education the authority to cancel or modify financial aid programs during times of national emergency, such as the coronavirus pandemic.
J. Michael Connolly, an attorney representing the two borrowers, speculated during Tuesday’s arguments that the Biden administration would seek to rationalize the debt forgiveness through another legal avenue that requires a public comment period if it could not do so through the HEROES Act.
But the liberal justices found the argument appalling, saying there was no evidence the administration would have taken the action Brown and Taylor wanted if it hadn’t been able to rely on the HEROES Act.
Meanwhile, much of the debate in the GOP case has centered on Missouri’s standing to sue and potential harm to the Missouri State Higher Education Loan Authority, or MOHELA.
The entity is one of the federal government’s largest lenders charged with collecting student debt payments. It also funds state scholarships. The states said MOHELA would lose revenue from making direct loans — those made and owned by the federal government — if they were destroyed.
But while MOHELA has ties to Missouri, it operates largely independently of the state, which cannot touch its assets.
Prelogar said MOHELA will stand in the lawsuit as the loan servicer. However, MOHELA executives avoided a loan forgiveness fight and decided not to sue even makes you stand to file public records requests to obtain information needed for legal proceedings.
James Campbell, Nebraska’s Solicitor General, who argued on behalf of the states, tried to draw a connection between the state and MOHELA to illustrate that it is essentially a Missouri agency.
However, the liberal judges noted MOHELA’s absence from the legal challenges. And Judge Amy Coney Barrett questioned why Missouri “didn’t arm” MOHELA to file suit, which became “a matter of state policy,” Campbell said.
The judges also pointed out that MOHELA failed to pay millions of dollars contractually owed by Missourithereby weakening its connection to the state.
“It’s very difficult for me to say that there is sufficient interest for the state to speak on behalf of an entity that has the right to sue or be sued,” Sotomayor said.
Still, the plan’s survival depends on conservative justices who, during the arguments, appeared concerned about circumventing Congress’s authority. They have repeatedly invoked what is known as the major question doctrine, the concept that Congress should expressly authorize policies with significant political or economic consequences.
High Court cited doctrine last summer when it curtailed the Environmental Protection Agency’s ability to address climate change. And the court he sought more and more to receive it during years.
Republican led states also claim the loan forgiveness plan is a “major question case.”
Prelogar said that while Congress did not specifically name loan cancellation in the HEROES Act as one of the powers the education secretary has during crises, it intended to give that broad authority.
It is not known when the high court will rule, but a decision will be made before the end of its session this summer.