Millions of borrowers are awaiting an imminent decision by the Supreme Court on a pair of legal challenges to President Joe Biden’s signature student loan forgiveness plan. That plan, if allowed to move forward, could result in up to $20,000 in student debt relief for millions of Americans.
While the Supreme Court has not yet released its decision on the student loan forgiveness cases, it did release other opinions today. And the legal reasoning in one of those cases may contain some significant clues as to how the Court may rule in the loan forgiveness challenges.
Supreme Court Must Consider Standing In Deciding Student Loan Forgiveness Cases
In considering the legal challenges to Biden’s student loan forgiveness plan, the Supreme Court must evaluate two broad legal questions.
The first is whether the federal law that the Biden administration relied on to enact the plan actually authorizes such sweeping debt relief. The Biden administration cited to the HEROES Act of 2003 to establish the program, arguing that this statute gives the Education Department fairly sweeping authority to “modify” or “waive” nearly “any” statutory or regulatory federal student aid provision to address financial harms caused by a national emergency. This includes provisions related to loan forgiveness and discharge. A majority of Supreme Court justices seemed skeptical of these arguments during February’s blockbuster hearing on the cases.
But the second legal question that the justices must answer is whether the challengers who brought the suits have “standing” to sue, as contemplated by the U.S. Constitution. To have standing, a challenger must demonstrate that they would be injured by the federal rule or policy at issue. That injury must be concrete (not tenuous or speculative) and sufficiently tied to the challenged law or policy. And the relief that the party is seeking in bringing the challenge must actually remedy that alleged injury.
The Biden administration has strongly argued to the Supreme Court that the parties do not have standing. The case that many court observers view as the stronger of the two challenges was brought by a coalition of Republican-led states, led by Nebraska. These states argued that Biden’s student debt relief initiative would cause MOHELA, a state-affiliated loan servicing agency, to lose money and that, in turn, would harm the states. But the administration argued that MOHELA is financially independent of the state of Missouri, has minimal financial ties to the state, and has authority under state law to sue in its own name — which it declined to do. And in general, a party cannot file a lawsuit based on an injury incurred by someone else; they would not have standing.
During oral arguments in February, Justice Amy Coney Barrett joined the three liberal justices on the Supreme Court (Justices Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson) in expressing concerns that the challengers may not have standing. At one point during the hearing, Justice Barrett strongly implied that if MOHELA is the entity that would be injured by Biden’s student loan forgiveness plan, then MOHELA should have filed the lawsuit, or at least been included in the suit or forced to join, if in fact the agency is an “arm of the state” as the challengers had suggested.
If four Supreme Court justices conclude that the states don’t have standing, it would take just one more justice to join them to have a majority. If the challengers don’t have standing, then the Court could ultimately uphold Biden’s student loan forgiveness plan without fully addressing the question of HEROES Act authority.
New Supreme Court Decision Could Have Implications For Student Loan Forgiveness
On Thursday, the Supreme Court released its 7-2 opinion on Haaland v. Brackeen, a case involving a challenge to the Indian Child Welfare Act. The opinion was authored by none other than Justice Amy Coney Barrett.
While the case is, on its face, unrelated to the student loan forgiveness challenges, Justice Barrett rejected arguments made by the State of Texas — one of the challengers — that it had standing to bring claims against the federal government.
“Article III [of the United States Constitution] requires a plaintiff to show that she has suffered an injury in fact that is ‘fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief,” noted Barrett. The Supreme Court majority, led by Barrett, concluded that Texas had not met that burden, noting that the state had not articulated a concrete injury “fairly traceable” to the challenged law, and the remedy the state was seeking — an injunction and declaratory judgment that the challenged law is unconstitutional — “would not remedy the alleged injury.”
Critically, Barrett also rejected arguments made by the State of Texas that it can have third-party standing on behalf of someone else. “Texas claims that it can assert third-party standing on behalf of non Indian families. This argument is a thinly veiled attempt to circumvent the limits on parens patriae standing,” wrote Barrett. Parens patriae standing is the concept that states, in general, do not usually have standing to sue the federal government on behalf of its citizens, unless there is a separate, sovereign interest at issue.
The Biden administration had argued during the February court hearing on the student loan forgiveness cases that in order to conclude that the states had standing to sue the federal government over Biden’s student debt relief plan, the Supreme Court would have to depart from long-established precedent regarding standing.
The legal arguments over Biden’s student debt relief plan are certainly distinct from the Haaland case. And the Supreme Court could easily find ways of distinguishing the facts in Haaland from the facts in the legal challenges to student loan forgiveness. Nevertheless, the fact that the Court is maintaining its position and earlier precedents on a state’s standing to sue the federal government is noteworthy. And Barrett’s conclusions on third-party standing is particularly interesting, given the states’ arguments regarding MOHELA and her related comments made at the February hearing.
When Will The Supreme Court Rule On Student Loan Forgiveness?
The Supreme Court could issue a ruling on President Biden’s student loan forgiveness plan very soon, and potentially on Friday, June 16, which is the next opinion release day.
However, the Court has many more decisions to release, and so it could potentially release the decision on Thursday, June 22 or another date between then and early July.
Further Student Loan Forgiveness Reading
If The Supreme Court Rejects Biden’s Student Loan Forgiveness Plan, Here Are Other Options
4 Big Student Loan Updates When Payments Resume (And They Resume Soon)
Student Loan Forgiveness Update: What Biden’s Latest Move Means For Borrowers
5 Automatic Student Loan Forgiveness Initiatives That Are Not Before The Supreme Court
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