Supreme Court Signals Skepticism on Biden’s Effort to Forgive Student Debt

Justice

Neil Gorsuch

asked whether Education Secretary

Miguel Cardona

was outside his area of competence in putting forth a regulation with such an extensive economic impact. “I understand the secretary has considerable expertise when it comes to educational affairs, but in terms of macroeconomic policy, do we normally assume that every cabinet secretary—learned as they are—has that kind of knowledge?”

Liberal justices said that when Congress authorized the education secretary to respond to national emergencies by waiving or modifying legal provisions “applicable to the student financial assistance programs” so that borrowers weren’t worse off financially, debt cancellation obviously was part of the equation.

“Congress doesn’t get much clearer than that,” Justice

Elena Kagan

said. “We do congressional statutes every day that are really confusing. This one is not,” she said, referring to the program’s basis in a 2003 statute called the Heroes Act.

For its part, the Biden administration argued the issue shouldn’t have come before the court at all, because the six Republican-led states that filed one of the two cases argued Tuesday, as well as the two individual borrowers who brought the second, weren’t harmed by the debt-relief program and therefore lacked the legal standing to sue.

U.S. Solicitor General

Elizabeth Prelogar,

representing the government, said loan servicers that would lose revenue from debt forgiveness would have such standing. None actually challenged the program, she added, casting doubt on arguments that Missouri could sue on behalf of a state-affiliated student loan authority that distanced itself from the suit.

While the case centers on an interpretation of statute, the justices’ views of the underlying policy at times surfaced on Tuesday.

Justice

Sonia Sotomayor

said millions of students would benefit from the program, adding, “Many of them don’t have assets sufficient to bail them out after the pandemic.” Addressing James Campbell, the Nebraska solicitor general representing the state plaintiffs, she said: “And what you’re saying is now we’re going to give judges the right to decide how much aid to give them,” rather than the secretary of education.

Chief Justice

John Roberts

highlighted the hardship that fell on those who hadn’t taken on student debt. Imagine, he said, a high-school graduate who borrowed money to set up a lawn-care business, while a classmate instead went to college on a student loan.

“We know statistically that the person with the college degree is going to do significantly financially better over the course of life than the person without, and then along comes the government and tells that person, you don’t have to pay your loan,” Chief Justice Roberts said. “Nobody is telling the person who is trying to set up the lawn-service business that he does not have to pay his loan,” he said, “even though his tax dollars are” subsidizing his classmate.

The justices’ divergent views of separation of powers, the constitutional structure that assigns specific roles to the legislative, executive and judicial branches, frequently was at issue.

“The case reminds me of the one we had a few years ago under a different administration”—that of former President Donald Trump—“that tried acting on its own to cancel the Dreamers program, and we blocked that effort,” Chief Justice Roberts said, referring to temporary protection from deportation for some young people who entered the country without authorization.

“We take very seriously the idea of the separation of powers and that power should be divided to prevent its abuse,” he said.

Justice

Ketanji Brown Jackson

said that principle, rather than spurring the court to strike down the program, required the justices to sit the dispute out.

The principle of legal standing limits courts to disputes where the parties have a real stake, not just difference of opinion, she said.

The political branches should be left “to hash this out without interference from a torrent of lawsuits brought by states and entities and individuals who don’t have a real personal stake in the outcome,” she said.

If states can challenge any program based on the arguments in the student-loan case, she said, “I’m concerned that we’re going to have a problem in terms of the federal government’s ability to operate.”

The government began providing relief to student borrowers in March 2020, almost immediately after Mr. Trump declared the Covid-19 pandemic a national emergency. Then-Education Secretary

Betsy DeVos

temporarily suspended payments and interest accrual for borrowers with federal student loans. The Education Department extended the payment pause eight times under the Trump and Biden administrations.

With the temporary relief set to end last August, Mr. Cardona invoked the Heroes Act to cover permanent forgiveness of up to $10,000 for borrowers who earn less than $125,000 a year and an additional $10,000 of relief for those who held Pell Grants, which typically are awarded to the neediest students.

Mr. Cardona reasoned that borrowers were at increased risk of default as a result of the pandemic, citing research showing such a pattern following previous emergencies when the government granted temporary relief for student loans. 

Republicans accused the White House of using the Heroes Act as a back door to fulfill a Biden campaign pledge to forgive some student debt, a proposal that didn’t get through Congress. At arguments Tuesday, Ms. Prelogar said that Republican bills to forbid loan forgiveness likewise died. She said Congress anticipated debt cancellation in the American Rescue Plan, a 2021 bill providing various Covid-related programs that excluded forgiven loan amounts from income taxes.

The forgiveness plan was expected to face an uphill climb at the Supreme Court, where the conservative majority has taken a critical eye to other Biden initiatives and invalidated several related to the coronavirus pandemic, including a moratorium on tenant evictions and a requirement that large employers test their workers for infection or require them to obtain vaccinations.

In June, the court gave majority approval to a test of executive authority called the major questions doctrine, which requires clear authorization from Congress before the executive branch can implement policies with significant economic and political impact. 

Tuesday’s arguments stretched over three hours, and most justices’ remarks lined them up ideologically. Justices

Brett Kavanaugh

and

Amy Coney Barrett,

while evincing some discomfort with the loan program, focused on the procedural questions of legal standing and the education secretary’s particular responsibility for student financial aid, suggesting that they may cast pivotal votes for the program’s future.

“Some of the biggest mistakes in the court’s history were deferring to assertions of executive emergency power. Some of the finest moments in the court’s history were pushing back against presidential assertions of emergency power,” Justice Kavanaugh said.

Still, he noted, the court has drawn fine lines regarding the executive’s powers during the pandemic. The government, he said, argued that student-loan forgiveness was “right in the wheelhouse of what the secretary of education would normally be expected to do,” drawing a contrast to the Centers for Disease Control and Prevention’s eviction moratorium, which the court invalidated.

Justice Barrett probed the legal standing arguments put forward by both the states and the individual borrowers, who complain they couldn’t take advantage of the program’s maximum benefits.

“Could someone who finished paying their loans off right last year sue because they were disappointed that they weren’t included for reimbursement?” Justice Barrett asked.

“There was a $400 billion debt forgiveness program that was created, and the [two borrowers] have debts and they’re not being forgiven,” said J. Michael Connolly, the private plaintiffs’ lawyer.

A decision in the cases, Biden v. Nebraska and Department of Education v. Brown, is expected before July.

—Jan Wolfe and Gabriel T. Rubin contributed to this article.  

Write to Jess Bravin at [email protected]

Justice

Neil Gorsuch

asked whether Education Secretary

Miguel Cardona

was outside his area of competence in putting forth a regulation with such an extensive economic impact. “I understand the secretary has considerable expertise when it comes to educational affairs, but in terms of macroeconomic policy, do we normally assume that every cabinet secretary—learned as they are—has that kind of knowledge?”

Liberal justices said that when Congress authorized the education secretary to respond to national emergencies by waiving or modifying legal provisions “applicable to the student financial assistance programs” so that borrowers weren’t worse off financially, debt cancellation obviously was part of the equation.

“Congress doesn’t get much clearer than that,” Justice

Elena Kagan

said. “We do congressional statutes every day that are really confusing. This one is not,” she said, referring to the program’s basis in a 2003 statute called the Heroes Act.

For its part, the Biden administration argued the issue shouldn’t have come before the court at all, because the six Republican-led states that filed one of the two cases argued Tuesday, as well as the two individual borrowers who brought the second, weren’t harmed by the debt-relief program and therefore lacked the legal standing to sue.

U.S. Solicitor General

Elizabeth Prelogar,

representing the government, said loan servicers that would lose revenue from debt forgiveness would have such standing. None actually challenged the program, she added, casting doubt on arguments that Missouri could sue on behalf of a state-affiliated student loan authority that distanced itself from the suit.

While the case centers on an interpretation of statute, the justices’ views of the underlying policy at times surfaced on Tuesday.

Justice

Sonia Sotomayor

said millions of students would benefit from the program, adding, “Many of them don’t have assets sufficient to bail them out after the pandemic.” Addressing James Campbell, the Nebraska solicitor general representing the state plaintiffs, she said: “And what you’re saying is now we’re going to give judges the right to decide how much aid to give them,” rather than the secretary of education.

Chief Justice

John Roberts

highlighted the hardship that fell on those who hadn’t taken on student debt. Imagine, he said, a high-school graduate who borrowed money to set up a lawn-care business, while a classmate instead went to college on a student loan.

“We know statistically that the person with the college degree is going to do significantly financially better over the course of life than the person without, and then along comes the government and tells that person, you don’t have to pay your loan,” Chief Justice Roberts said. “Nobody is telling the person who is trying to set up the lawn-service business that he does not have to pay his loan,” he said, “even though his tax dollars are” subsidizing his classmate.

The justices’ divergent views of separation of powers, the constitutional structure that assigns specific roles to the legislative, executive and judicial branches, frequently was at issue.

“The case reminds me of the one we had a few years ago under a different administration”—that of former President Donald Trump—“that tried acting on its own to cancel the Dreamers program, and we blocked that effort,” Chief Justice Roberts said, referring to temporary protection from deportation for some young people who entered the country without authorization.

“We take very seriously the idea of the separation of powers and that power should be divided to prevent its abuse,” he said.

Justice

Ketanji Brown Jackson

said that principle, rather than spurring the court to strike down the program, required the justices to sit the dispute out.

The principle of legal standing limits courts to disputes where the parties have a real stake, not just difference of opinion, she said.

The political branches should be left “to hash this out without interference from a torrent of lawsuits brought by states and entities and individuals who don’t have a real personal stake in the outcome,” she said.

If states can challenge any program based on the arguments in the student-loan case, she said, “I’m concerned that we’re going to have a problem in terms of the federal government’s ability to operate.”

The government began providing relief to student borrowers in March 2020, almost immediately after Mr. Trump declared the Covid-19 pandemic a national emergency. Then-Education Secretary

Betsy DeVos

temporarily suspended payments and interest accrual for borrowers with federal student loans. The Education Department extended the payment pause eight times under the Trump and Biden administrations.

With the temporary relief set to end last August, Mr. Cardona invoked the Heroes Act to cover permanent forgiveness of up to $10,000 for borrowers who earn less than $125,000 a year and an additional $10,000 of relief for those who held Pell Grants, which typically are awarded to the neediest students.

Mr. Cardona reasoned that borrowers were at increased risk of default as a result of the pandemic, citing research showing such a pattern following previous emergencies when the government granted temporary relief for student loans. 

Republicans accused the White House of using the Heroes Act as a back door to fulfill a Biden campaign pledge to forgive some student debt, a proposal that didn’t get through Congress. At arguments Tuesday, Ms. Prelogar said that Republican bills to forbid loan forgiveness likewise died. She said Congress anticipated debt cancellation in the American Rescue Plan, a 2021 bill providing various Covid-related programs that excluded forgiven loan amounts from income taxes.

The forgiveness plan was expected to face an uphill climb at the Supreme Court, where the conservative majority has taken a critical eye to other Biden initiatives and invalidated several related to the coronavirus pandemic, including a moratorium on tenant evictions and a requirement that large employers test their workers for infection or require them to obtain vaccinations.

In June, the court gave majority approval to a test of executive authority called the major questions doctrine, which requires clear authorization from Congress before the executive branch can implement policies with significant economic and political impact. 

Tuesday’s arguments stretched over three hours, and most justices’ remarks lined them up ideologically. Justices

Brett Kavanaugh

and

Amy Coney Barrett,

while evincing some discomfort with the loan program, focused on the procedural questions of legal standing and the education secretary’s particular responsibility for student financial aid, suggesting that they may cast pivotal votes for the program’s future.

“Some of the biggest mistakes in the court’s history were deferring to assertions of executive emergency power. Some of the finest moments in the court’s history were pushing back against presidential assertions of emergency power,” Justice Kavanaugh said.

Still, he noted, the court has drawn fine lines regarding the executive’s powers during the pandemic. The government, he said, argued that student-loan forgiveness was “right in the wheelhouse of what the secretary of education would normally be expected to do,” drawing a contrast to the Centers for Disease Control and Prevention’s eviction moratorium, which the court invalidated.

Justice Barrett probed the legal standing arguments put forward by both the states and the individual borrowers, who complain they couldn’t take advantage of the program’s maximum benefits.

“Could someone who finished paying their loans off right last year sue because they were disappointed that they weren’t included for reimbursement?” Justice Barrett asked.

“There was a $400 billion debt forgiveness program that was created, and the [two borrowers] have debts and they’re not being forgiven,” said J. Michael Connolly, the private plaintiffs’ lawyer.

A decision in the cases, Biden v. Nebraska and Department of Education v. Brown, is expected before July.

—Jan Wolfe and Gabriel T. Rubin contributed to this article.  

Write to Jess Bravin at [email protected]