The student debt relief program will provide critical relief to over 40 million borrowers most at risk of delinquency or default when the student loan pause ends. These are working and middle class borrowers – 90% of the relief going to out-of-school borrowers will go to those earning less than $75,000 per year.
The demand for the program is undeniable: to date 26 million people have applied for debt forgiveness, and 16 million applications have been approved. President Biden's plan would cancel $10,000 in federal student loan debt for those earning less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically come from lower-income households, would receive an additional $10,000 in debt forgiveness, for a total of $20,000.
Several conservative justices suggested the administration had exceeded its authority with the program, yet a broad coalition of law scholars, economists, experts and public officials agree, and even conservative legal scholars believe that challengers to this program lack standing to even bring their case to the Supreme Court.
The Biden Administration’s case for student debt relief
Congress granted the Secretary of Education the authority under the HEROES Act to provide relief to borrowers affected by a national emergency.
The previous Administration initiated an across-the-board pause on student loan payments under the HEROES Act, and none of these plaintiffs sued over that action.
Secretary Cardona found that ending the pause without additional relief would cause delinquencies and defaults to spike above pre-pandemic levels, as working- and middle-class borrowers still recovering from the economic fallout of COVID-19 struggle to make payments they haven’t made since March 2020.
Default rates typically increase twenty-fold for borrowers after an extended period of nonpayment ends. And default rates are higher for Pell Grant recipients.
Neither set of challengers to the Administration’s debt relief program has standing to even bring their case to the Supreme Court:
The states have not suffered any legally sufficient injury. Instead, challengers to the program cite alleged harms to loan servicer MOHELA, a separate legal entity that has chosen not to sue. They also cite harms the states have inflicted upon themselves independent of the Administration’s debt relief program.
In the Texas case, plaintiffs concede that they don’t have standing to bring the only claim the district court said had merit.
Challengers’ claims against the legality of the program also fail:
They don’t meaningfully dispute that the plain text of the HEROES Act authorizes the student debt relief plan.
The plan is reasonable given the threat of default to borrowers, and it is clearly explained by the Secretary’s memo outlining the rationale for the action he took.
Challengers rely on the major questions doctrine, which doesn’t apply:
The Court has said the major questions doctrine applies only when an agency claims a power that is both “highly consequential” and “beyond what Congress could reasonably be understood to have granted” given the statutory context.
The HEROES Act is specifically intended to allow the Secretary to respond to a crisis by modifying any of the requirements of a government benefit program at the heart of his expertise and existing authority. The debt relief plan falls comfortably within the type of authority Congress would have understood him to have when they passed the HEROES Act.
The across-the-board pause initiated by the previous Administration was also economically significant, and not one of these challengers ever sued over the pause.
Every case in which the Court has applied the major questions doctrine involved an agency action taken to regulate, not to provide a benefit like debt relief.
The Supreme Court heard arguments Tuesday, but there won’t be a decision for months. The court usually issues all of its decisions by the end of June.
Republican States increasingly use lawsuits to block Biden Administration Policies
Biden’s only hope for being allowed to move forward appeared to be the slim possibility, based on the arguments, that the court would find that Republican-led states and individuals challenging the plan lacked the legal right to sue.
That would allow the court to dismiss the lawsuits at a threshold stage, without ruling on the basic idea of the loan forgiveness program that appeared to trouble the justices on the court’s right side.
In recent years, Republicans have repeatedly parlayed state lawsuits into a forceful tool to get the conservative court to block the Biden administration's policies.
The numbers of these lawsuits is skyrocketing, and it is at least possible that the Supreme Court would like to see fewer of them. To do that, though, they would have to limit the doctrine of legal standing as it has been interpreted lately.
Legal standing means that to get in the courthouse door, a state has to show that its citizens have been harmed in some concrete way. The question in this case is whether any of the states have shown that.
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