This past week, the United States Supreme Court heard challenges to President Biden’s program giving partial student loan forgiveness. There are two separate cases (one brought primarily by Republican states and one brought by individuals), but the issues in the two case are relatively similar.
The first issue in both cases is standing. For those unfamilar with standing, it derives from the Constitution’s language giving federal courts authority to decide cases and controversies. Traditionally, courts have viewed this language as barring the ability of parties from requesting “advisory opinions” about how courts would rule if the parties did X. As such, the courts require a real dispute. More importantly, standing is concerned about who brings the dispute. In simplest terms, a party can’t bring a case merely because they don’t like what the other party is doing. The party bringing the case must be injured by the opposiing party’s actions in a way that can be fixed by the court. Under the federal system, the state governments do not have the right to challenge the acts of the federal government merely because a given state disagrees with the federal government’s decisions. They have to show that the federal government’s acts injure that state.
For the state challenge, the lower court found standing based on the impact of loan forgiveness of MOHELA. To understand the issue, one needs to know what MOHELA is. Several of the states over the years have gotten heavily involved in the processing and handling of student loans. I remember that when I was in law school, my student loans were handled by the Pennsylvania equivalent of MOHELA. While I do not know the structural details of all of these agencies, MOHELA is somewhat equivalent to Fannie Mae. Like Fannie Mae, MOHELA is a separate entity from the state government. MOHELA is not a party to the case. The question for the Supreme Court is whether Missouri has the right to speak for MOHELA. If there is a decision in favor of the student loan forgiveness program, it is likely to be based on the theory that Missouri is not MOHELA and Missouri has not shown that it will be harmed if MOHELA is harmed. If Missouri does not have the right to sue on behalf of MOHELA, it is unclear how any of the state governments has standing on any other theory.
The individual plaintiffs also have standing issues. The people bringing this case are people who owe money for student loans but are not covered by the program. The problem with their challenge is that they do not have a good theory on how they would actually benefit from striking down the current program. At best, their argument is that, if the Supreme Court strikes down this program, there might be a new proposal put forward which would cover them. That type of theory is normally not enough to get standing.
Assuming that one of the plaintiffs (most likely Missouri) survives the standing question, the Supreme Court would then consider two merits issues. The first issue is whether the administration’s actions are justified by the plain language of the statute. The statute in question is the Heroes Act, codified at Title 20, Section 1098bb of the United States Code. Put simply, this statute (enacted in response to the September 11 attacks) authorizes the Secretary of Education to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” established by federal law in response to a “war or other military operation or national emergency.” The remainder of the statute gives some guidance on the use of this authority including directives that such waivers and modifications should: 1) make sure that individuals affected the emergency are not placed in a worse position due to the emergency or modifications; and 2) that such waivers should ease the burden on the affected individuals without threatening the integrity of the financial assistance programs.
The two big arguments on whether the statute covers the loan forgiveness program go to whether there is any demonstrated harm from a national emergency which would justify the relief and whether loan forgiveness is authorized by the language about waiving and modifying the terms of any federal program. While not contesting that, at least for a period, the COVID 19 pandemic caused financial difficulties for some student loan recipients, the argument from the challengers is that those difficulties were temporary and that, now that the dangers of the pandemic have receded, there is no need for further relief. Normally, resolution of these types of factual issues are left to the discretion of the administrative agency absent showing of clear error, but the Supreme Court could decide that the states should get the opportunity to make that showing. Assuming that the Secretary correctly found that the COVID 19 pandemic has created a long-term continuing burden on borrowers, the other issue is a legal issue — whether loan forgiveness is a modification or waiver of the rules governing the programs. From a simple common-sense perspective, loan forgiveness would seem to qualify as a waiver of the requirement that borrowers fully repay the loan, but the majority could decide on a very technical reading of the statutory language.
The other issue is related to the statutory interpretation question. This issue is the “major questions” doctrine. This doctrine has recently reemerged as a conservative tool to fight executive power (at least when exercised by Democrats). This doctrine is essentially a tool for interpreting statutes. Basically, it asks whether the proposed use of the statute fits within the anticipated uses of the statute. If the proposed use appears to be a “major change,” the statute has to clearly cover the change. There are two problems with the doctrine. First, most statutes contain broad grants of authority. While there are specific problems which each statute is designed to address, the statute typically is broad enough to cover similar problems that might arise in the future. Second, how generally one view what types of problem fit within the grant of authority is very subjective. The very concept behind the general grant of authority is to give the executive the tools to appropriately design a remedy to future problems (or to alter the remedy to existing problems if a better remedy emerges). The legislature recognizes that it is not psychic and is unable to predict the future. Rather than needing the legislature (which has institutional barriers to quick responses to problems) to address every situation which arises, the purpose behind these statutes is to allow the executive branch to quickly respond to these variations on existing issues. So it is not possible for Congress to clearly authorize every conceivable remedy. While the best solution is to turn back to the general rules of statutory authority interpretation and ask whether the best read of the statute covers the administrative action, such traditional rules of statutory interpretation is inadequate to server the desires of those who want to restrict government power. Hence the emergence of the “major questions” doctrine as a major tool of judicial activism on behalf fo the far right.
As always, it is difficult to predict this Supreme Court. The question is how far the conservative majority is willing to go in breaking the court system to achieve their goals. The history of this country has several examples of the Supreme Court trying to defy the will of the majority. Those examples always lead to a pushback from elected politicians and threats for changes to the laws governing the judiciary. Sometimes those laws pass. Sometimes, the Supreme Court backs down. Sometimes, the public comes around to the position taken by the Supreme Court. As noted above, the easy solution is for the Supreme Court to use standing to concede this issue to the Biden Administration. If the Supreme Court strikes down this policy, that could certainly be an issue that could make a difference in the 2024 election and could result in some changes to the laws that the conservative majority will not like (e.g., mandatory retirement, term limits on active service, changes to the number of justices).
