The U.S. Supreme Court held a hearing on Tuesday, February 28, 2023 concerning two cases that opposed the President’s student loan forgiveness plan, Joseph R. Biden, President of the United States, et al., Petitioners v. Nebraska, et al. (22-506) and Department of Education, et al., Petitioners v. Myra Brown, et al. (22-535).
The federal government was represented by Solicitor General of the United States, Elizabeth B. Prelogar. Nebraska was represented by Nebraska’s Solicitor General, James A. Campbell. Myra Brown was represented by John Michael Connolly of Consovoy McCarthy PLLC.
The questions asked by the justices may provide some insights into their thinking. They asked questions about legal standing, the major questions doctrine, the definition of waive or modify, the price tag of the President’s student loan forgiveness plan, separation of powers, fairness of forgiveness, the difference between worse off and better off, and the intent of Congress.
Let’s dive into this recap of the Supreme Court hearing on Biden’s student loan forgiveness plan so you can understand the viewpoints.
Before a plaintiff’s lawsuit can be considered on the merits, the plaintiff must demonstrate legal standing. Legal standing requires that the plaintiff demonstrate that they have been harmed directly and definitively by the actions of the defendant. This is known as “injury in fact.”
The key point of demonstrating legal standing, as Justice Jackson said, is to “allow the political branches 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.”
Justice Alito asked, “It’s the case, isn’t it, that if any party in either of these two cases has standing, then it would be permissible for us to reach the merits of the issue?”
The Nebraska case is more likely to demonstrate legal standing, but nevertheless faces several problems in establishing legal standing.
Several of the justices asked questions about the legal standing of the state of Missouri, which brought a lawsuit on behalf of MOHELA, a state loan agency. MOHELA did not itself filed a lawsuit seeking to block the President’s student loan forgiveness plan. This is referred to as “third-party standing.”
Justice Alito asked, “You think that the fact that MOHELA is incorporated is the end of the day? That’s enough to defeat standing?” He continued, “And where we’re considering injury in fact, why should the test turn solely or why should the lack of corporate status be a necessary element? Why shouldn’t the test be something more like whether the relationship between this entity and the State of Missouri is such that an injury to MOHELA will necessarily or presumptively be an injury to the state?”
Justice Jackson highlighted how the state of Missouri had financially disentangled itself from MOHELA, “if we look at MOHELA and we see that its financial interests are totally disentangled from the state, it stands alone, it’s incorporated separately, the state is not liable for anything that happens to MOHELA, I don’t know how that could possibly be a reason to say that an injury to MOHELA should count as an injury to the state.” Justice Jackson noted that “MOHELA has the ability to defend itself and its interests.”
Justice Sotomayor highlighted the separation between the state of Missouri and MOHELA, saying, “And it would be odd for us to have a state say we’re creating a corporation, we’re not going to be responsible for its debts, we’re not going to be responsible for any of its contracts, we’re not going to be responsible for anything it does financially, and the state itself says this is not the state, it’s an independent corporation, and we’re going to say instead that it is the state, correct?”
Later on, Justice Sotomayor asked the attorney representing the plaintiffs, “How can you have injury in fact if you immunize — you, the state, have immunized yourself from any liability or any injury that MOHELA can experience?”
After the plaintiff’s attorney said, “MOHELA doesn’t need to be here because the state has the authority to speak for them,” Justice Barrett asked, “If MOHELA is an arm of the state, why didn’t you just strong-arm MOHELA and say you’ve got to pursue this suit?”
Justice Kagan asked the plaintiff’s attorney about the problems with third-party standing, saying, “Usually we don’t allow one person to step into another’s shoes and say, ‘I think that that person suffered a harm,’ even if the harm is very great.” Justice Kagan continued, “We leave it to the person, him or her or itself, to make that judgment. Now, here the state has derived very substantial benefits from setting up MOHELA as an independent body with financial distance from the state and sue and be sued authority. So why isn’t MOHELA responsible for deciding whether to bring this suit?”
The Brown case lacks standing because their challenge to the use of the Heroes Act of 2003 wouldn’t do anything to redress their alleged harm, but instead ensure that nobody receives debt relief. The argument is also a bit circular, assuming the conclusion in order to establish legal standing.
Justice Sotomayor said, “I’m at a loss as to how you have standing because there is no notice and procedure required under the HEROES Act. The only way you can win is if you strike down this program completely, and that means that you don’t get an opportunity to be heard, but nobody else does either. … This is so totally illogical to me that you come into court to say I want more, I’m going to file a suit to get more, but I know I’m going to get nothing.” Solicitor General Prelogar aptly referred to the Brown case as a “Rube Goldberg theory of standing.”
Major Questions Doctrine
Several justices asked whether the major questions doctrine would apply if the case is considered on the merits.
The U.S. Supreme Court previously ruled, in West Virginia v. EPA (2022), that the major questions doctrine applies in cases involving “vast economic and political significance” such as “massive spending.” It requires clear and unambiguous statutory text authorizing a specific agency action in such situations. This is not a new doctrine. The 2001 U.S. Supreme Court ruling in Whitman v. American Trucking stated that Congress does not “hide elephants in mouseholes.”
Chief Justice Roberts said, “But whether Congress acted or not was a factor that we considered in the Major Questions Doctrine, and the way we considered it is whether or not the issue that was before the Court is something that had been seriously considered and debated and was a matter of political controversy before Congress. That certainly is the case here, right? … Well, not just a politically significant action but one that has the attention of Congress. The fact that it hasn’t acted under the Major Questions Doctrine but has considered the matter we cited as support for the notion that maybe it should be one for Congress. … If you’re talking about this in the abstract, I think most casual observers would say, if you’re going to give up that much amount of money, if you’re going to affect the obligations of that many Americans on a subject that’s of great controversy, they would think that’s something for Congress to act on. And if they haven’t acted on it, then maybe that’s a good lesson to say for the President or the administrative bureaucracy that maybe that’s not something they should undertake on their own.”
Justice Kavanaugh pointed out that the Heroes Act of 2003 does not refer to loan cancellation and loan forgiveness. “So then that leaves us with a situation that I think we’ve seen before, an old statute with kind of general language, Congress specifically considering the present issue repeatedly but not, as you acknowledge, passing legislation that would authorize the specific action and then, in the wake of Congress not authorizing the action, the executive, nonetheless, doing a massive new program.”
Justice Kavanaugh said, “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 powers.”
On the other hand, Justice Kagan pointed to the “waive or modify” language in the Heroes Act of 2003, saying, “Congress doesn’t get much clearer than that. We deal with congressional statutes every day that are really confusing. This one is not.”
Waive or Modify
Yet, Chief Justice Roberts said, “It doesn’t say modify or waive loan balances.”
Justice Kavanaugh agreed, saying that “Congress … could have in 2003 referred to loan cancellation and loan forgiveness, and those are not in the statutory text.”
Later, though, Justice Kavanaugh said that “waive” is “an extremely broad word,” and “in 2003, Congress was very aware of potential emergency actions in the wake of September 11th and war, possible terrorist attacks, and yet it puts that extremely broad word, “waive,” into the statute.”
Justice Barrett said, “Just to be clear, waiver in the statute refers to waiving the statutory and regulatory provisions, not waiving the obligation to repay?”
There was some discussion of the cost of the President’s student loan forgiveness plan, to some extent in the context of the Major Questions Doctrine.
Chief Justice Roberts said, “In an opinion we had a few years ago by Justice Scalia, he talked about what the word ‘modify’ means, and he said modified in our view connotes moderate change. … We’re talking about half a trillion dollars and 43 million Americans. How does that fit under the normal understanding of ‘modifying’?”
Justice Sotomayor said, “The forbearance of payment is $5 billion a month or something like that? It’s an outrageous sum. And yet no one is disputing that the Secretary has that power. It’s not the amount of money. The question is what’s Congress’s intent.”
Separation of Powers
There was also some discussion of the separation of powers, since only Congress has the power of the purse.
Chief Justice Roberts said, “Your view [is] that the President can act unilaterally, that there was no role for Congress to play in this either, and at least in this case, given your view of standing, there’s no role for us to play in this — in this either. … We take very seriously the idea of the separation of powers and that power should be divided to prevent its abuse.”
Justice Alito said, “Drawing a distinction between benefits programs and other programs seems to presume that when it comes to the administration of benefits programs, a trillion dollars here, a trillion dollars there, it doesn’t really make that much difference to Congress. That doesn’t seem very sensible.”
Justice Thomas said, “As a cancellation of $400 billion in debt, in effect, this is a grant of $400 billion, and it runs head long into Congress’s appropriations authority.”
Justice Sotomayor said, “That really has us, as the third branch of government, changing Congress’s words because we don’t think we like what’s happening.”
Justice Jackson said, “What concerns me is that to the extent you’re talking about separation of powers and major questions, the judiciary is part of the same constitutional separation of powers dynamic that compels us to think about questions like the Major Questions Doctrine. And I feel like we really do have to be concerned about jumping into the political fray, unless we are prompted to do so by a lawsuit that is brought by someone who has an actual interest. So, this is why I’m sort of pressing really hard on the standing point.“
There was a discussion of the fairness of student loan forgiveness in the Brown case.
Chief Justice Roberts asked whether it was fair to forgive the loans borrowed by students but not the loans borrowed to start a lawn care service. He said, “Now it seems to me you may have views on fairness of that and they don’t count. I may have views on the fairness of that and mine don’t count. We like to usually leave situations of that sort, when you’re talking about spending the government’s money, which is the taxpayers’ money, to the people in charge of the money, which is Congress.”
Justice Sotomayor responded that “everybody suffered in the pandemic, but different people got different benefits because they qualified under different programs.”
Justice Kagan also said. “Congress passed a statute that dealt with loan repayment for colleges, and it didn’t pass a statute that dealt with loan repayment for lawn businesses,” she said. “ And so Congress made a choice, and that may have been the right choice or it may have been the wrong choice, but that’s Congress’ choice.”
No Worse Off vs. Better Off
Justice Gorsuch asked about whether the statutory language in the Heroes Act of 2003 that allows the Secretary to “waive or modify” provisions to ensure that “affected individuals are not placed in a worse position financially” allows them to be in a better position financially.
Justice Gorsuch said, “So some persons can be better off is your position. I guess how many is my next question, right? Let’s say two people in Missouri, okay, all right, they’re better off, fine. But what if it’s 90 percent of the class just hypothetically that — could the Secretary do that under this statute?”
Intent of Congress
Solicitor General Prelogar responded to the Chief Justice’s question about the Major Questions Doctrine and whether the President’s student loan forgiveness plan should have been left for Congress by pointing out that the American Rescue Plan Act provides evidence of the intent of Congress to permit the President’s student loan forgiveness plan.
Solicitor General Prelogar said, “During the pandemic, Congress enacted a provision of the American Rescue Plan that specifically anticipated and sought to facilitate a program of loan discharge by providing that it wouldn’t be subject to federal taxation from 2021 to 2025.”
This is a key point that had not been made previously in any of the legal briefs filed in the case.
Editor: Robert Farrington
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