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SCOTUS Majority Saddles Millions With Crushing Student Loan Debt

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In a 6-3 ruling, the Supreme Court’s far-right majority struck down the Biden administration’s forgiveness of student debt for lower-income borrowers. The administration had granted this debt relief in response to the COVID-19 national emergency. The Court’s decision reimposes enormous debt on millions of people. It also creates a precedent designed to make it harder for federal agencies to adopt necessary health and safety regulations. The case is Biden v. Nebraska.

President Biden's debt forgiveness plan

This was part of the national response to the ongoing economic impact of COVID-19. The government took action under a law called the HEROES Act (the Higher Education Relief Opportunities for Students Act) of 2003. The HEROES Act lets the Secretary of Education waive financial assistance requirements in a national emergency.

The continuing economic impact of COVID-19 puts lower-income borrowers at higher risk of default. So last year, the Education Department said it would issue up to $10,000 in relief to eligible borrowers making less than $125,000 per year. That was the income level that data showed is the threshold at which repayment capability is likely to substantially change. Under the plan, qualifying Pell Grant recipients would have been able to get up to $20,000 in relief.

The Biden plan would have significantly reduced or even eliminated the debt of millions of lower-income people across the country. In fact, nearly half of Latino borrowers and a quarter of Black borrowers would have their entire student debt relieved.

Conservatives worked hard to create the current 6-3 far-right majority. So they ginned up lawsuits to get the issue before the justices.

Two manufactured lawsuits

One case before the Court involved individuals who were not harmed by the Biden plan, and who would not have been helped in any way by having the Court strike it down. Myra Brown wasn't covered by the loan forgiveness because she borrowed from a commercial lender rather than the federal government. And Alexander Taylor was slated to get $10,000 in relief but not $20,000 because he was not eligible for a Pell Grant.

Their lawsuit should have been dismissed immediately, since they obviously don’t have standing to sue. But district court judge Mark Pittman, a Trump nominee, held that they had standing and struck the program down. This grasping for an excuse to decide the case was too much even for the current Supreme Court. In Department of Education v. Brown, the justices unanimously held that Judge Pittman should have dismissed the case.

Unfortunately, the Supreme Court’s far-right justices were still eager to address the issue. They did so in Biden v. Nebraska, a lawsuit by six states led by officials opposed to Biden’s debt relief plan. In fact, none of the states could show an actual injury from the plan. But the court majority ruled that one of them – Missouri – had done so.

How did the majority rule that Missouri had standing?

Chief Justice John Roberts wrote the opinion for the 6-3 majority. First, he wrote that Missouri had standing to sue, because debt relief would affect a state agency called the Missouri Higher Education Loan Authority (MOHELA). MOHELA handles billing and payments for federal student loan payments. It gets paid a fee for this. If a loan is cancelled, MOHELA doesn’t get a fee. So for Roberts, that was enough to give Missouri standing – and give the justices their opportunity to strike down the Biden plan.

What did the dissent say about standing?

Justice Elena Kagan (joined by Justices Sonia Sotomayor and Ketanji Brown Jackson) agreed that if MOHELA itself had sued, it would have had standing. It could have sued, but it chose not to.

As for Missouri itself, Kagan pointed out that none of MOHELA’s revenue actually gets passed through to the state. As she wrote, “the state’s treasury will not be out one penny” because of the Biden plan. MOHELA was set up to be financially and legally separate from the state that created it. She compared it to how corporations are legally and financially separate from the people who incorporate them. Missouri and the other states have an ideological disagreement with the administration’s plan, but they are not actually affected by it. Kagan wrote that by hearing the case anyway, the majority was forgetting that the Court’s proper role is to consider actual cases rather than decide policy disputes.

The majority struck down the debt relief plan

Once the far-right majority gave itself permission to address the substance of the case, they dredged up one of the new favorite tools: the “major questions doctrine.”

Last year, the Court struck down EPA regulations designed to combat climate change because the plan had an enormous economic and political impact. That made it what the majority called a “major question.” They held that agencies addressing “major questions” must point to “clear congressional authorization” for their actions.

But the majority’s reasoning was not limited to the EPA or to climate change. The “major questions” doctrine gives powerful business interests a legal weapon to use to sabotage important health and safety protections they oppose. It undermines long-recognized federal authority to actually help people in deeply meaningful ways.

That’s what happened here. In the HEROES Act, Congress specifically gave the president the power to “waive or modify” the Education Act’s legal provisions for student loans in case of a national emergency. According to the majority, those terms by definition include only “modest adjustments.” Since the Biden loan forgiveness plan would affect 43 million borrowers and involve $430 billion in federal debt, that is not a “modest adjustment.” The chief justice’s opinion characterized this as an “exhaustive rewriting” of the Education Act.

Because of the proposal’s “economic and political significance,” the far-right majority ruled that this was a “major question.” Like in the EPA case last year, the Court held that agencies addressing such “major questions” must have “clear congressional authorization” to do so.

How did the dissenters respond?

Justice Kagan’s dissent pointed out that the HEROES Act clearly and explicitly gives the administration the authority to create such a far-reaching policy. The statute lets the administration “waive or modify any statutory or regulatory provision” relating to student loans. Faced with this obviously “expansive delegation” of power, she wrote, the majority had to find some justification outside the statute to reach its chosen result:

So the majority resorts, as is becoming the norm, to its so-called major-questions doctrine. And the majority again reveals that doctrine for what it is—a way for this Court to negate broad delegations Congress has approved …

What will the impact be?

The decision by the six far-right justices will immediately saddle 43 million people with debt that the elected branches of government opted to relieve them of. As noted above, the impact will be particularly severe for Black and Latino individuals.

The damage from this case will go even farther. That’s because of the “major questions” doctrine. It is a weapon that can be used by those who have long sought to undo the New Deal – to make it harder for federal agencies to adopt measures to protect our rights, our safety, and our lives.

Cases raising the “major questions doctrine” are already in the lower courts. Examples include ones on requiring COVID-19 vaccinations for people working with children in a Head Start program; setting a minimum wage for federal contractors; and canceling student debt of borrowers who attended for-profit schools accused of defrauding students. There will be even more after this decision.

That is why we need to make sure President Biden fills every vacancy with judges who understand that our courts should work for everyone, not just the wealthy and powerful.