What has happened with the Supreme Court student loan cases so far
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The Supreme Court had its first hearing on President Biden’s student debt relief plan on Tuesday. The Court heard oral arguments in the two cases against student debt relief- Department of Education v. Brown and Biden v. Nebraska.
Several of the Court’s conservative justices seem highly skeptical of Biden’s authority to cancel millions of dollars of federal student loan debt via the Heroes Act. The Court’s liberal justices argued in favor of the program, stating that the COVID-19 pandemic and resulting national emergency gives the administration the right to employ the Heroes Act for student debt relief. They also expressed doubts about the legal standing of the two cases brought against the debt relief plan.
The Supreme Court’s conservative justices hold a 6-3 majority, meaning that it will ultimately come down to them to decide the fate of President Biden’s student debt relief program. Experts have previously predicted that the conservative court would strike down the debt relief program. Still, a stellar performance by Solicitor General Elizabeth Prelogar, who argued on behalf of the Biden administration, has many changing their tune.
Here are the main takeaways from this week’s oral arguments and what they mean for the future of student debt relief.
Main takeaways from the Supreme Court oral arguments
This week’s oral arguments highlighted several key questions in the legal battle over student debt relief. The most prevalent question is whether or not the Biden administration and the Department of Education have the legal authority to cancel student debt under the Heroes Act.
The Major Questions Doctrine, which specifies that executive acts with significant legal and financial implications must be authorized by Congress, was also brought up several times during the hearing. The Supreme Court has used the Major Questions Doctrine to strike down past initiatives by the Biden administration.
At the same time, both conservative and liberal justices questioned the legal standing of MOHELA, the student loan servicer in Missouri that stands to lose significant profit if the student debt relief program is implemented.
Despite the court’s serious reservations about Biden’s student debt relief program, this week’s hearing gave new hope to those who favor the program. This is largely due to arguments from the Biden administration’s legal counsel, Elizabeth Preloger.
Lawyer for the Biden administration could save student loan forgiveness
Solicitor General Elizabeth Prelogar performed exceptionally well during this week’s oral arguments. She argued that Biden’s student debt relief plan falls well within the president’s power to relieve borrowers of significant financial burden during a national emergency. She was also sure to emphasize that Biden’s student debt relief plan is an emergency provision and a direct response to the financial fallout of the COVID-19 pandemic, countering the idea that this action is disproportionate to the harm experienced by borrowers.
Solicitor General Prelogar also argued that the plaintiffs in these two cases have not provided significant evidence that they will be directly harmed by the program.
Prelogar impressed several student loan and legal experts this week, and many have noted that she may be able to sway the justices in favor of the student debt relief plan. Her performance was contrasted by that of opposing counsel, who experts say did not argue their points nearly as well. “It was like the difference between a star quarterback and two tiddlywinks players,” student loans expert Mark Kantrowitz told CNBC.
While Prelogar’s legal skill could be enough to turn the tides in favor of student debt relief, there is still a lot of uncertainty. President Biden released a statement following Tuesday’s hearing, stating, “I’m confident we’re on the right side of the law. I’m not confident about the outcome of the decision yet.”
The Heroes Act and the Major Questions Doctrine
The Biden administration’s case relies heavily on the Heroes Act and whether or not the proposed student debt relief plan exceeds the scope of what the act is intended for. The Heroes Act gives the Secretary of Education the power to waive or modify student loan programs to protect students from the fallout of national emergencies.
Conservative justices made it clear during the oral arguments that they feel Biden’s student debt relief plan is too big a move to be considered a modification. Chief Justice John Roberts was quick to voice these concerns, saying, “We’re talking about half a trillion dollars and 43 million Americans. How does that fit under the normal understanding of modifying?”
Given the conservative-led Court’s reservations about Biden’s legal authority under the Heroes Act, it is no surprise that the Major Questions Doctrine also came into play during the arguments. This Supreme Court has a history of using the Major Questions Doctrine to strike down sweeping executive actions. The questions posed at this week’s hearing make it clear that the role of congress and perceived abuses of executive power will be a major element of the Court’s decision.
Can Missouri sue on behalf of MOHELA?
The arguments in favor of student debt relief largely focused on whether or not the plaintiffs in the two cases have the legal standing to sue over the program. In particular, justices from both sides of the aisle questioned Missouri’s decision to sue on behalf of the Higher Education Loan Authority of Missouri (MOHELA). The financial impact student loan forgiveness will have on MOHELA was a significant factor in Biden v. Nebraska making it to the Supreme Court. Yet, the company has distanced itself from the case, and the state of Missouri is suing on its behalf.
Notably, conservative Justice Amy Coney Barrett joined liberal justices in questioning the state’s grounds to sue on behalf of MOHELA, asking why Missouri did not “strong arm” the company into bringing the case forward itself.
Justice Sonia Sotomayor was highly skeptical of the state’s legal standing, saying, “It’s just very hard for me to say that there is an interest sufficient for the state to speak on behalf of an entity who has the right to sue or be sued.”
Legal counsel for the plaintiffs in Biden v. Nebraska argued that MOHELA is a state agency. Still, the justices seemed skeptical of this argument, noting that MOHELA owes money to the state of Missouri that it has not paid for over a decade.
The question of fairness
Another major argument brought up by the Court’s conservative justices was whether or not Biden’s student debt relief plan is fair. This argument is heavily tied to Department of Education v. Brown, initially brought up by two graduate students who felt Biden’s debt relief plan did not have broad enough eligibility criteria. Some of the Court’s conservative justices, including Justice Samuel Alito, raised this question to Solicitor General Prelogar.
However, some of the Court’s liberal justices took issue with this line of questioning. Justice Sotomayor pointed out that, in a society of limited resources, there is inherent unfairness. “I think the bottom-line answer to be, everybody suffered in the pandemic. But different people got different benefits because they qualified under different programs, correct?” Justice Sotomayor said in response to the question of fairness.
Protests in support of student debt relief
As oral arguments proceeded inside the Supreme Court, hundreds of protesters rallied outside to support student loan forgiveness. The protest was organized by the NAACP, an organization that has been one of the biggest advocates for student debt relief due to the impact the decision will have on Black students. Several Democratic lawmakers appeared at the rally and addressed the protesters, including Senators Bernie Sanders and Elizabeth Warren.
The protest outside the Supreme Court on Tuesday served as an important reminder of the high stakes of this decision for the borrowers it will impact.
Justice Sotomayor made note of these high stakes and the practical implications of student debt relief during her remarks to Nebraska’s legal counsel. She outlined the significance of this decision for the 40 million borrowers who stand to benefit, as well as the financial impact the COVID-19 pandemic has had on them. She also called into question that the Supreme Court is more qualified to decide on student debt relief than the Department of Education.
“And what you’re saying is now we’re going to give judges the right to decide how much aid to give them instead of the person with the expertise and the experience, the secretary of education who’s been dealing with educational issues and the problems surrounding student loans,” Justice Sotomayor said.
How long will the Supreme Court decision take?
Now that oral arguments have concluded, the Supreme Court justices will hold a private conference to cast tentative votes on the two challenges to Biden’s student loan forgiveness plan. The court will then draft a majority opinion. There is no guarantee how long this will take, but the Court typically issues all decisions by the end of June.
Will the payment pause be extended again?
While the Biden administration indicated that its most recent pause on student loan payments will be the last, there has been speculation that the administration will extend the payment pause again if the court rules to strike down its student debt forgiveness plan. The Biden administration has not indicated that it would extend the payment pause again.
Still, such a move is not out of the question given the administration’s past extensions of the payment pause and the expected financial fallout for borrowers if the student loan forgiveness plan does not pass. While another extension is possible, borrowers should still prepare to begin making payments again this summer.