Last year, President Biden announced that he would cancel student-loan debts of up to $20,000 for millions of borrowers. While that policy had been under discussion since the first days of his administration, only after the announcement did the administration’s lawyers advance a legal justification for the action—that it came under the 2002 HEROES Act.
That law was passed to allow the Secretary of Education to waive or modify student debts for service members or others suffering financial hardships “as a result of wars, military operations or national emergencies.” Biden’s legal team came up with the argument that, since the law pertained to “emergencies” and the Covid pandemic had been deemed an emergency, the president was acting within his authority.
Many pointed out that the president himself had said that the Covid “emergency” was over and that, since the passage of the HEROES Act, Congress had declined to enact bills that would have directly dealt with student-loan cancellation. In short, the government’s argument was a gigantic stretch.
Biden’s loan cancellation came under attack because it is bad policy and because the president has no authority to do it.Biden’s loan-cancellation policy immediately came under attack, both because it is a bad idea policy-wise (as Jenna Robinson and I argue here) and because the president has no legal authority to do it (as Nebraska’s attorney general Mike Hilgers argues here).
Legal action commenced soon after the president made his announcement. The attorneys general of six states filed suit to block implementation of the plan. Also, two students who were ineligible for loan forgiveness sued, arguing that the administration had violated the Administrative Procedure Act by not following the law’s public notice and comment requirements before putting the executive order in place. (The two cases have been consolidated for argument.) In November, a federal judge issued an order striking down the administration’s plan, and the 8th Circuit Court of Appeals declined to intervene against it, leading the government to appeal to the Supreme Court.
Prior to this Tuesday’s oral arguments, the justices read the briefs from the opposing parties and perhaps also some of the friend-of-the-court (“amicus”) briefs filed by interested outsiders. (Here is a particularly good one from the Buckeye Institute.) During oral arguments, each side’s attorney presents its case, and the justices often interrupt to ask questions or make comments. The justices don’t say exactly how they view the outcome, but, often, they give suggestions as to their inclinations.
An important legal question that came up during this case’s argument was that of “standing to sue.” That’s a legal concept that says, in essence, that courts don’t want to hear suits brought by parties unless they can show that they have been concretely injured. It’s not enough, for example, for a taxpayer to argue that the Biden plan harms him by causing the waste of tax dollars. “Lack of standing” arguments often shield bad federal policies from court challenges.
Presenting the government’s case, Solicitor General Elizabeth Prelogar argued that the states (specifically Missouri) lacked standing to sue, and therefore the Court should dismiss the suit. Missouri’s argument is that its higher-education loan authority will lose operating funds under the Biden policy, and therefore the state has standing. Justice Elena Kagan picked up on that, asking why the agency itself hadn’t filed suit. But Justice Samuel Alito then observed that, since the loan authority is an entity of the state, the fact that the state is suing seems satisfactory.
It is unlikely that the majority will let “standing” questions get in the way of deciding such an important case.The Court’s “liberal” bloc would probably like to dispose of the case on “standing” grounds, thereby allowing the government to continue with loan cancellation. Justice Ketanji Brown Jackson asked if it wouldn’t be better for the Court to hold off before “jumping into the political fray.” But I think it unlikely that the majority will let standing questions get in the way of deciding such an important case on its merits.
Another of the key issues raised during arguments was whether so contentious a matter as the cancellation of billions of dollars in loan debt is one that the president is allowed to decide unilaterally. Under the Constitution, Congress is given the power of the purse and all legislative authority. Although the Court has, for the last several decades, taken a very lenient approach towards executive-branch power, last year, in West Virginia v. Environmental Protection Agency, it signaled a return to an older, Originalist constitutional interpretation in ruling that, on “major questions” of public policy, the executive branch needs clear congressional approval before acting.
Trying to head off that line of reasoning, Solicitor General Prelogar suggested that the “major questions” doctrine should apply when the executive branch is acting in a way that affects people’s rights, but not when it’s just a matter of money. That argument, however, didn’t seem to sway the justices. Spending billions of dollars is a “major question,” since money spent on student-loan forgiveness cannot be spent on other things.
Chief Justice John Roberts responded to Prelogar’s idea by saying, “We take very seriously the idea of separation of powers and that power should be divided to prevent its abuse.” That sentence sounds like the basis for a majority opinion.
Similarly unimpressed with the argument for leaving student-loan cancellation in the hands of the executive branch was Justice Neil Gorsuch, who said, “I understand the Secretary of Education has considerable expertise when it comes to educational affairs, but in terms of macroeconomic policy, do we normally assume that a cabinet member has that kind of knowledge?” The answer, of course, is “no,” and that it is up to Congress to make laws that have macroeconomic implications.
The conservative justices were skeptical that the HEROES Act provides legal cover for Biden’s plan.On the crucial question of the intent behind the HEROES Act, the “conservative” justices were evidently skeptical of the government’s claim that it provides a legal cover for Biden’s plan. Justice Clarence Thomas questioned whether the president’s blanket loan-forgiveness policy was consistent with the Act’s intention of allowing loan help to individuals who are struggling in the face of a crisis, since many beneficiaries are very well employed. Also, Chief Justice Roberts observed that the Act talks about loan “modification” but not mass cancellation.
As is her wont, Justice Sonia Sotomayor would like the case to be decided on emotional grounds. She said to Nebraska’s attorney, “There’s 50 million students who will benefit from this. Many of them don’t have assets to bail them out after the pandemic. And what you’re saying is that we’re going to give judges the right to determine how much to give them instead of the Secretary of Education.” That probably won’t sway any of the justices who understand that the case turns on the legality of what the president has decreed, not on how many people might benefit from having their student loans cancelled.
The Court will most likely release its ruling in Biden v. Nebraska in June. I think it is apt to continue the good (and long overdue) trend it began last year in restoring the Constitution’s separation of powers. This case dovetails with West Virginia v. EPA, and therefore Biden’s student-loan cancellation should be declared illegal.
George Leef is director of editorial content at the James G. Martin Center for Academic Renewal.