[The result is that student debt cancellation for 43 million
borrowers has been wiped away.]
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SUPREME COURT DECIDES FAKE PLAINTIFFS ARE GOOD PLAINTIFFS  
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David Dayen
June 30, 2023
The American Prospect
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_ The result is that student debt cancellation for 43 million
borrowers has been wiped away. _

People demonstrate outside the Supreme Court, June 30, 2023, in
Washington., Jacquelyn Martin/AP Photo

 

Approximately 43 million Americans were made between $10,000 and
$20,000 poorer today (plus interest) thanks to six Republican lawyers
from Harvard and Yale. They decided that a program based on a statute
intended to modify student loan balances in the event of an emergency
could not modify student loan balances in the event of the COVID-19
emergency. And they did it by claiming that a plaintiff was injured by
this program, when that plaintiff did not petition the Court over its
injury, had no involvement in the case, and would likely not be
injured by the program.

This is the upside-down world in which the Supreme Court dealt a fatal
blow to the Biden administration’s student debt cancellation
program. Advocates and members of Congress are now calling for a Plan
B, to enact debt relief by some other means; for various reasons, I
doubt that the administration will take that opportunity. But what
should not be ignored is the way in which the nation’s highest court
relies on dodgy theories and facts not in evidence to make the
pronouncements it wants.

The plaintiffs in the two student loan cases, one of which was so
preposterous that it was thrown out unanimously
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of standing (that was the one where two borrowers said they didn’t
have a chance to make public comment to get more debt relief, and that
the remedy should be that nobody gets debt relief), simply didn’t
like that borrowers would have some debt canceled, on ideological
grounds. Nobody seriously contests this as their aim. But in American
law, at least in theory, you have to have standing to sue: A party
would have to be harmed by 43 million people getting debt relief, and
eliminating the debt relief would have to redress this harm.

The Roberts Court, with the chief justice writing for the majority,
believes they found one in the Missouri Higher Education Loan
Authority (MOHELA), a student loan servicer that stands to lose $44
million in servicing fees from debts that would be wholly canceled,
according to the state of Missouri’s calculations. There’s one
problem: MOHELA is not a plaintiff in the case. MOHELA in fact
didn’t know about the case until hearing news reports, played no
role in the case, opposed the case from being brought, and would not
give the state of Missouri evidence for the case until required by
state sunshine laws. We know all this from internal documents and
public statements
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by MOHELA.

Even if MOHELA went ahead and sued, the contract they signed to accept
federal student loans for servicing stipulates explicitly
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that the government has “sole discretion” to remove contracts from
servicers, that the contractor cannot “object or protest,” and
that the contractor “waives and releases all current or future
claims” related to this. Perhaps this is why MOHELA did not sue in
this case. Moreover, MOHELA stood to gain from debt cancellation on
net, because it would get an estimated $61 million in fees to process
forgiveness (more than Missouri said they would lose), and it would
eliminate legal liability from botching Public Service Loan
Forgiveness (PSLF) claims, and many of those loans would have been
extinguished in debt cancellation.

Roberts dismisses MOHELA’s lack of involvement, and ignores its lack
of injury. To him, a “harm to MOHELA is also a harm to Missouri.”
He writes that it is a “public instrumentality” established by the
state, with a board that has state officials and others appointed by
state officials, which oversees MOHELA and can abolish it. Therefore,
MOHELA didn’t have to get involved with the lawsuit, because it’s
part of the state itself.

What should not be ignored is the way in which the nation’s highest
court relies on dodgy theories and facts not in evidence to make the
pronouncements it wants.

Justice Elena Kagan, in her dissent, made quick work of this argument.
She notes that MOHELA has the power under state law to file suit, yet
it was explicitly not involved in this case. MOHELA is also
“financially independent from Missouri—as corporations typically
are, the better to insulate their creators from financial loss,”
Kagan writes. MOHELA’s assets are its alone, as are its debts. “So
MOHELA’s revenue decline—the injury in fact claimed to justify
this suit—is not in fact Missouri’s.”

In other words, Missouri set up MOHELA with a separate corporate
identity, a separate legal function, a separate financial function,
and a separate contracting function. Yet when Missouri needed MOHELA
to give life to their ideological opposition to student debt relief,
it dragooned them into the case, the first time in MOHELA’s history
that Missouri decided to sue on their behalf. Kagan amusingly cites a
case from just last week, _Haaland v. Brackeen_, where the same Court
decided a state cannot sue the government on behalf of its citizens.
So it had to find some harm, and it pulled in MOHELA. “Is there a
person in America who thinks Missouri is here because it is worried
about MOHELA’s loss of loan-servicing fees? I would like to meet
him,” Kagan correctly writes.

Regardless, John Roberts and his colleagues, at odds with prior
precedent (the Missouri Supreme Court in a nearly identical case ruled
that a public instrumentality was, in fact, separate from the state),
allowed the state to assert the rights of an unwilling third party.
This breaks with the typical conservative tactic of limiting standing
and access to courts, as Kagan points out, quoting Roberts himself
about how “utterly manipulable” standing law had become in the
1970s. “In adjudicating Missouri’s claim, the majority reaches out
to decide a matter it has no business deciding,” Kagan writes. “It
blows through a constitutional guardrail intended to keep courts
acting like courts.”

But Roberts and company swiftly moved to the merits, where they
employed their invented “major questions” doctrine to decide that
the HEROES Act, which gives the secretary of education the authority
to “waive or modify” student loan rules in an emergency, doesn’t
allow the secretary to waive or modify too much. There’s no upper
bound set on how much you can waive or modify; it’s more of a thing
that conservative justices know when they see it. Ian Millhiser can
give you the dirty details
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on this particular bit of lawlessness.

I recognize that this is all now sadly history. But it’s important
on its own terms. On the same day that the Court violated standing
rules to decide the fate of 43 million borrowers based on an unwilling
(and apparently, unharmed) plaintiff, it also decided that a website
designer had the First Amendment right to deny services to a gay
couple based on an entirely fake solicitation
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for a wedding website, which that designer does not and has never
made. We talk about the corruption of the judiciary based on its
leading justices taking travel junkets with billionaires. But there is
a subtler corruption, whereby the Court picks up whatever facts,
whether true or untrue, and wields them as weapons to decide cases
that fit their prior beliefs.

A final postscript: Advocates are now calling on President Biden to
come up with a Plan B to cancel student debt. He could actually move
to Plan A. When this magazine
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and others argued that a president has the authority to cancel student
debt, before there was such a thing as COVID-19, we based it on the
Higher Education Act of 1965 and its “compromise and settlement”
authority to deal with outstanding debts. This could enable the
secretary of education to modify or cancel debts, per that theory.

Many observers, all the way up to Senate Majority Leader Chuck
Schumer, are demanding this. “The Biden administration has remaining
legal routes to provide broad-based student debt cancellation,”
Schumer wrote in a statement after the ruling. But I should point out
that Roberts already tried to preempt the Higher Education Act
strategy in his majority opinion. He writes that the HEA “authorizes
the Secretary to cancel or reduce loans, but only in certain limited
circumstances and to a particular extent,” which he then enumerates
(wrongly, I might add, claiming that “bankrupt borrowers may have
their loans forgiven,” when the 2005 bankruptcy law severely limited
that exercise).

There’s really no doubt in my mind that, if the administration tried
again, Roberts and this same majority would go right back to this and
say that the statute limits the ability to do any kind of mass
cancellation, regardless of the plain words of the statute. And
there’s no doubt that they’ll stretch as far as possible finding
some plaintiff with an imagined injury on whose behalf they can rule.

I believe as strongly as anyone in the president’s authority to
execute the nation’s laws. This case doesn’t deter me from that
general belief; the only way to make progress is to try to make
progress. But in this instance, six unelected men and women in robes
are determined to contribute to the suffering of millions of young
people. Without action to check their power, they’ll get away with
it.

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David Dayen is the Prospect’s executive editor. His work has
appeared in The Intercept, The New Republic, HuffPost, The Washington
Post, the Los Angeles Times, and more. His most recent book is
‘Monopolized: Life in the Age of Corporate Power.’

* Supreme Court; Student Debt; President Biden
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