The Supreme Court is scheduled to decide the financial fortunes of more than 40 million Americans who will seek significant student loan relief, while hearing arguments about the legality of President Joe Biden’s plan to provide targeted relief to student loan borrowers.
On February 28, the court is expected to hear arguments about whether millions of Americans are eligible for up to $20,000 in student loan debt forgiveness should get relief, or whether they should be forced to continue paying the debt.
With a six-vote conservative supermajority, it seems unlikely that the court will rule to uphold the actions of the executive-branch sweep by the Democratic administration involved in the redistribution of money from creditors to debtors. But there may be a way for at least some judicial conservatives to preserve debt relief programs while achieving conservative goals.
The most likely way the program will survive the challenge presented in two cases – Biden v. Nebraska and Department of Education v. Brown – if the result turns on the question of standing; that is, whether the party suing to challenge the program can prove that it harms them, and whether they are the proper party. If the court rules that the six states and two individuals suing the administration lack standing, the judge will not have to rule on whether the program is legal.
“The theory of standing that has been thrown against the wall in this case is wrong, and many will have dangerous implications,” conservative law professors Samuel Bray and William Baude argued in a peer-reviewed brief filed in the case. .
Despite their own belief that the government’s debt relief plan is “illegitimate,” Bray and Baude argue that no state or individual can properly prove that they will be harmed by the program. And if the court were to grant standing, it would further expand the state’s ability to bring lawsuits to compel or block executive action – something three of the conservative justices opposed in the 2007 case Massachusetts v. EPA, where the court gave the state “special solicitude” to demand that the government regulate carbon emissions.
Chief Justice John Roberts wrote a dissent in the decision joined by Justices Clarence Thomas and Samuel Alito and Justice Antonin Scalia. In his dissent, Roberts argued that the “special solicitude” granted to the state becomes “a lawyer’s game, rather than a fundamental limitation to ensure that the courts are courts and do not interfere with the politically responsible branch.”
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Courts are meant “to decide concrete cases — not a convenient forum for policy debate,” Roberts added.
That concern is “prophetic,” Bray and Baude write. Since then, there has been a dramatic increase in lawsuits filed by state attorneys general challenging federal actions when opposing parties occupy the White House. Under former President Barack Obama, the GOP attorney general led the way in filing more than 50 lawsuits. The Democratic attorney general filed more than 130 lawsuits during Donald Trump’s presidency. And now Republicans have filed more than 50 such claims against Biden.
“The state’s larger theories are emblematic of a broader trend in which states are taking advantage of the ambiguous language of Massachusetts v. EPA to challenge dissenting federal actions,” Bray and Baude wrote. “Unless this Court wants to sit in constant judgment of every major executive action — which is not a constitutional role — it’s time to say ‘stop.'”
By rejecting the existing theory in student loan debt cases, Roberts and other conservatives could set new limits on the state’s “special solicitude” to stand, or reject it altogether. This can help keep courts out of some thorny political questions while making it more difficult for liberal attorney generals to sue to enforce environmental or civil rights laws. It’s something that Fordham Law School Professor Jed Shugerman, who supports student loan relief, warned about in a brief to the court to support the state’s argument for standing.
The move would allow Roberts to do what he has done in the past: uphold the policy priorities of Democratic presidents while advancing his own agenda at the same time.
The case for standing for the eight plaintiffs is quite simple, according to Baude, Bray and the brief submitted by the Biden administration, among others.
Biden announced a plan to provide student loan relief to some borrowers on August 24, 2022. The plan provides $20,000 in aid to Pell Grant recipients and $10,000 to other borrowers who earn less than $125,000 a year in 2020 or 2021. Biden claimed authority under the Act -the HEROES Act of 2003 to provide debt relief during the COVID-19 national emergency.
The debt forgiveness plan drew a swift legal challenge backed by conservatives. The states of Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina sued in the 8th Circuit, while Myra Brown and Alexander Taylor, two student borrowers, brought suit in the 5th Circuit.
Among Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina, the 8th Circuit Court of Appeals only gave standing to Missouri. Claims of harm from the other five countries are all very weak, because they were found either alone or absent.
Iowa, Kansas, Nebraska and South Carolina claim they will lose tax revenue because of a 2021 law that exempts student loan debt from being counted as “gross income.” These states say they will lose tax revenue because they link their own state tax definition of “gross income” to the IRS definition.
However, court precedent has held that states cannot sue for harm from actions they themselves took. It is the individual choice of Iowa, Kansas, Nebraska and South Carolina to tie the state tax code to the federal tax code.
In the 1976 case of Pennsylvania v. other countries. The court found that Pennsylvania does not need to provide such a tax credit, and ruled that the state “can not be heard to complain about the damage inflicted by their own hands.”
Claims for standing are also suspect because of alleged indirect harm. In a 1927 case, after Florida challenged a federal inheritance tax on the grounds that it would cost the state tax revenue, the court rejected Florida’s argument, finding that the harm was “at most, remote and indirect.”
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The states of Arkansas, Missouri and Nebraska claim that they will lose revenue because the White House program will only directly benefit family loans, and will encourage borrowers to consolidate family loans into direct loans. Since some state entities hold investments in the family’s debt, the state claims it will be harmed. But the government changed its policy to prohibit debtors from consolidating in this way in order to receive the proposed relief.
“Borrowers with federal student loans are not foreclosed [the Department] unable to obtain one-time debt relief by consolidating these loans into Direct Loans,” a brief submitted to the court by the Biden administration notes.
For Brown and Taylor, both sued to challenge the plan claiming that they will not receive the promised relief in whole, because they have personal debt, or in part, because they did not receive the maximum of $20,000 offered to Pell Grant recipients. He said the ability to register complaints is irrelevant when the administration doesn’t send the policy through the normal notice-and-comment process.
Here, the remedy sought by Brown and Taylor, to eliminate the program, was disproportionate to the alleged harm—not including all or some relief. Briefs from Baude and Bray, and from the Biden administration, said they had no position since eliminating the program would not solve the alleged harm.
As for administrative complaints, the HEROES Act waived changes in debt payments during declared national emergencies from the normal notice-and-comment period, so the Biden administration’s brief asserted that the harm did not exist.
That leaves Missouri – which claims it will lose money if the state-made student loan servicer MOHELA is obligated to contribute to the state’s fund-raising fund, because MOHELA could lose income from any loans forgiven.
While this is the “strongest argument on standing by the plaintiffs,” Bray and Baude argue, it is problematic because “the state of Missouri is not the ‘proper party’ to bring this lawsuit.”
Although created by the state, MOHELA is an independent entity that has the power to sue and be prosecuted. MOHELA, not Missouri, is the party to be sued here, the briefs from Bray and Baude and from the Biden administration argue – something is not being done.
The claim of standing because MOHELA may not be able to pay the state’s obligations has its own problems. In addition to speculative arguments, the state has extended MOHELA and is late in paying what is due. It may set a new standard for standing that will create many adverse consequences.
If the court accepts that theorythat would give “any borrower” standing to sue to block “any rule that reduces borrowers’ income,” Bray and Baude said — adding that “that theory shouldn’t be taken seriously here.”
Conservative justice may ultimately rule in favor of standing, as they did in some cases post-Massachusetts v. EPA. where the state made the same argument. If they do, then the case will come down to whether the relief program is legal, or if it is not allowed according to the court’s “main doctrinal question” that limits expansive regulatory actions that affect the economy. But standing is the best bet the Biden administration has to keep the plan intact, despite the collateral damage.