Supreme Court: You Owe Your Soul To The Student Debt Store

The US Supreme Court today tossed out President Joe Biden’s student loan forgiveness plan (Washington Post gift link), ruling in a 6-3 decision that Biden lacked the authority to order the debt forgiveness plan without an explicit bill from Congress.

As you’ll recall, Biden announced last August a plan for the Education Department to forgive up to $10,000 for millions of borrowers in federal student loan programs, or up to $20,000 for folks who’d received Pell grants while in college. As many as 40 million Americans would have benefited from the plan. The loan forgiveness program was limited to people with incomes under $125,000 a year for an individual or $250K for a married couple, although relatively few borrowers met that upper limit anyway. The administration estimated that 90 percent of the loan forgiveness would go to borrowers making less than $75,000 a year.

Previously!

Supreme Court ‘Skeptical’ Of Student Debt Relief, If You Can Believe That!

What Good Arguments Will Supreme Court Ignore In Student Debt Relief Case?

Look At These Twerps Who Ruined Student Loan Forgiveness For Everybody

Joe Biden CANCEL CULTURES Student Debt! So How Do You Get You Some Of That?

Here’s Joe Biden To Tell You How He’ll Cancel Assloads Of Student Debt!

Almost as soon as Biden stepped away from the podium and the TV cameras switched off, rightwing groups started filing lawsuits to overturn the debt relief plan. Quite a few fizzled out as federal courts decided the plaintiffs lacked standing, because even if plaintiffs resented someone else having some of their debt forgiven, that’s hardly proof that they were harmed themselves. The Court actually decided two cases on the debt forgiveness program today, throwing out one for lack of standing but deciding in the other that Biden didn’t have the authority to forgive loans under the 2003 HEROES Act, which enables the Education Department to waive student debt obligations during times of national emergency.

Standing: You’re Grounded!

One set of plaintiffs in the case, Alexander Taylor and Myra Brown, claimed that they had been harmed because their loans didn’t qualify for debt relief — in Taylor’s case, because he didn’t qualify for the upper limit of the debt forgiveness and in Brown’s because her loans were privately held. They argued the Education Department didn’t follow proper procedures in setting up the debt forgiveness program, but the Court held today that they lacked standing, so tough nuggets, kids, and welcome to the dubious fame of being a judicial footnote.

Surprisingly, though, the Supremes agreed that the other plaintiffs, a group of six states led by Nebraska, did have standing, however sloppy the argument was. One or the six, Missouri, argued that its nonprofit state agency that services student loans nationwide, the “Missouri Higher Education Loan Authority,” aka MOHELA, would surely lose revenue because of the debt forgiveness. It’s a weird argument, because as was pointed out in oral arguments, MOHELA is a legally separate entity from the state of Missouri, and MOHELA did not join the lawsuit.

In his decision in Biden et al. v. Nebraska et al., Chief Justice John Roberts et all Missouri’s arguments, including the claim that MOHELA would lose out on $44 million a year in fees on the cancelled debt. Mind you, that’s a bit of a fiction too, since it assumes all those borrowers will pay their outstanding loans, when many will just say the hell with it and default. Roberts brushed right past the claim that MOHELA is a separate entity, citing a couple precedents that we aren’t going to chase down, and insisting that

where a State has been harmed in carrying out its responsibilities, the fact that it chose to exercise its authority through a public corporation it created and controls does not bar the State from suing to remedy that harm itself.

You don’t often see a Supreme Court decision argue that an issue of standing is literally close enough enough for government work, but at least Roberts didn’t cite any 17th century witchfinders, so let’s get on to the merits of the case.

We shouldn’t be too surprised since the Court keeps taking cases simply for the sake of throwing its weight around, as we saw last year when the Court struck down an EPA regulation that never went into effect, and today, when they protected a hypothetical Christian website designer from being sued by hypothetical gay people. (We’ll have a separate post on that shortly.)

We Don’t Need Another HEROES Act. Or Maybe We Do.

The administration argued that it had the authority to waive student debt during the pandemic emergency, because the 2003 HEROES Act allows the Department of Education to issue “waivers and modifications” to change student debt payments during times of national emergency.

Roberts noted that sure, the law says the secretary of Education can do that, but not to the tune of an estimated $430 billion in student loan principal, because well, just because, you see. Here’s his explanation, minus the internal citations:

The text of the HEROES Act does not authorize the Secretary’s loan forgiveness program. The Secretary’s power under the Act to “modify” does not permit “basic and fundamental changes in the scheme” designed by Congress.[…] Instead, “modify” carries “a connotation of increment or limitation,” and must be read to mean “to change moderately or in minor fashion.” That is how the word is ordinarily used and defined, and the legal definition is no different.

The authority to “modify” statutes and regulations allows the Secretary to make modest adjustments and additions to existing provisions, not transform them. Prior to the COVID–19 pandemic, “modifications” issued under the Act were minor and had limited effect. But the “modifications” challenged here create a novel and fundamentally different loan forgiveness program. While Congress specified in the Education
Act a few narrowly delineated situations that could qualify a borrower
for loan discharge, the Secretary has extended such discharge to nearly
every borrower in the country.

In short, Roberts says, the Education Department did some modifications and waivers under the law, but they were TOO BIG and so the entire thing exceeded the administration’s authority, so knock it off.

In a dissent that she summarized from the bench, Justice Elena Kagan said that the case never should have been taken up by the Court to start with, because the states lacked standing in the first place. The dissent (page 48 of the decision PDF), joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, points out that the HEROES Act contains none of the supposed limits Roberts invented, and that the law’s only internal limit is that the Education secretary

could do only what was “necessary” to alleviate the emergency’s impact on affected borrowers’ ability to repay their student loans. […] But within that bounded area, Congress gave discretion to the Secretary. He could “waive or modify any statutory or regulatory provision” applying to federal student-loan programs, including provisions relating to loan repayment and forgiveness. And in so doing, he could replace the old provisions with new “terms and conditions.” […] The Secretary, that is, could give the relief that was
needed, in the form he deemed most appropriate, to counteract the effects of a national emergency on borrowers’ capacity to repay. That may have been a good idea, or it may
have been a bad idea. Either way, it was what Congress
said.

Gee, sure looks like Kagan is looking at the law’s text and original intent there, huh?

The real problem, though, Kagan wrote, is that the Court had itself overstepped its own authority by taking a case where the plaintiffs lacked standing:

Under Article III of the Constitution, a plaintiff must have standing to challenge a government action. And that requires a personal stake—an injury in fact. We do not allow plaintiffs to bring suit just because they oppose a policy. Neither do we allow plaintiffs to rely on injuries suffered by others.

Such limits on judicial meddling are vital, but were ignored in this case, she argued:

The plaintiffs in this case are six States that have no personal stake in the Secretary’s loan forgiveness plan. They are classic ideological plaintiffs: They think the plan a very bad idea, but they are no worse off because the Secretary differs. In giving those States a forum—in adjudicating their complaint— the Court forgets its proper role. The Court acts as though it is an arbiter of political and policy disputes, rather than of cases and controversies.

Kagan went on to note that this is a pretty disturbing habit with the current court, citing last year’s case against the EPA, which was another case where Congress delegated broad regulatory authority to a government agency, only for the Court to impose arbitrary new rules to claim that Congress needed to be more specific in giving direction to the Executive branch.

Ultimately, said Kagan, the Court substituted its own ideological preferences for the will of Congress, and that is not good for America, nor good for the Court:

The Court refuses to acknowledge the plain words of the HEROES Act. It declines to respect Congress’s decision to give broad emergency powers to the Secretary. It strikes down his lawful use of that authority to provide student-loan assistance. It does not let the political system, with its mechanisms of accountability, operate as normal. It makes itself the decisionmaker on, of all things, federal student-loan policy. And then, perchance, it wonders why it has only compounded the “sharp debates” in the country?

Gosh, she’s so divisive!

Unfortunately, she’s also outnumbered, so Biden’s loan relief program is toast. But here’s where we have some good news for people struggling with student loans: Many of us can still get some relief — including, for many, complete cancellation of debt — through existing parts of the loan system that aren’t at all affected by this rotten decision. Here are the two pieces where we’ve covered this so far, and we’ll follow them up with a concise guide tomorrow, and when that’s up we’ll link it here, too)

Also Too!

I Got My Student Loans Ready For Joe Biden’s Big Income-Based Forgive-A-Thon And You Should Too

Did Joe Biden Just Fix Student Loan Debt Going Forward? Mayyyyybe!

[WaPo (gift link) / Biden V. Nebraska decision]

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