Supreme Court Reviews Biden Plan to Forgive $400B in Student Debt 

WASHINGTON — The Supreme Court’s conservative majority showed skepticism during a hearing Tuesday of the Biden administration’s authority to forgive more than $400 billion in student debt.

The Education Department is invoking the national emergency created by the COVID-19 pandemic to eliminate as much as $20,000 per borrower to help them avoid loan defaults or bankruptcy.

As reported in The Well News, six Republican states sued to stop the plan under the Higher Education Relief Opportunities for Students Act, also known as the HEROES Act. They argue it would be inflationary and unfairly compel other taxpayers to pay the debts of the former students.

Their attorneys general argued before the Supreme Court that President Joe Biden’s administration lacks authority for the biggest debt forgiveness program in U.S. history without the express authorization of Congress.

Comments from the court’s conservatives showed they largely agreed as they discussed the “major questions doctrine.”

The doctrine is based on former Supreme Court interpretations of the separation of powers described in the Constitution.

It says that when a government agency tries to decide an issue of “vast economic or political significance,” it must have clear statutory authorization from Congress. A vague or general delegation of authority as an agency is not valid.

Federal agencies that overreach on their authority seek to “hide elephants in mouse holes,” the Supreme Court said in its 2001 decision in Whitman v. American Trucking Assns. Inc. that set out the major questions doctrine.

Chief Justice John Roberts questioned how such a large debt forgiveness could be considered merely a modification of the HEROES Act.

“We’re talking about half a trillion dollars and 43 million Americans. How does that fit under the normal understanding of ‘modify’?” Roberts asked.

Justice Brett Kavanaugh called the debt forgiveness a “massive new program” that lacks the approval of Congress. “That seems problematic,” Kavanaugh said.

The dispute is centered on a section of the HEROES Act that gives the secretary of education authority to “waive or modify any statutory or regulatory provision” to protect student loan borrowers affected by “a war or other military operation or national emergency.”

With more than a million Americans dead from COVID-19, millions of others who lost their jobs during a national shutdown and the ongoing economic decline it caused, the pandemic was exactly the kind of national emergency the law envisioned, according to the Biden administration.

Attorneys for Missouri argued they would have a lot to lose if the Education Department succeeds with the debt forgiveness.

Missouri operates the Higher Education Loan Authority program, also known as MOHELA. It is one of the nation’s largest student loan servicers. It collects borrowers’ payments before passing them on to the federal government.

Although it operates similarly to a private lending institution, it returns its profits to the Missouri state government. Wiping out large amounts of student debt also would reduce MOHELA’s profits.

About one in five Americans owe part of the $1.6 trillion in outstanding federal student debt, according to the Federal Reserve. More than half of the borrowers owe less than $20,000 while a third owe less than $10,000.

Student debt is most common among borrowers 25-34 years old. 

The HEROES Act would grant as much as a $10,000 reprieve for most borrowers and up to $20,000 for recipients of Pell grants, which are given to low-income persons. The amount of debt forgiveness depends on a showing of financial need among applicants.

Liberals on the Supreme Court questioned whether the states of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina, along with two individual borrowers, had a right to sue, also known as standing. Their comments indicated they thought the plaintiffs were intruding into a federal legislative policy that was not within their discretion to block.

Justice Elena Kagan said the language of the HEROES Act gave clear authority to the president to take extraordinary action during the pandemic. 

The court often handled “really confusing” statutes, Kagan said. “This one is not,” she added.

Justice Sonia Sotomayor said the consequences of not forgiving the debt could be more severe than compelling borrowers to pay. “The evidence is clear that many of them will have to default,” she said.

The hearing drew sharp comments from some members of Congress.

Sen. Bernie Sanders, I-Vt., said outside the Supreme Court, “I have talked to people all over this country who literally delay having a family, can’t have any kids, they can’t afford a car, they can’t afford to have a middle class life because they’re drowning in this student debt.”

He added, “In America, you shouldn’t have to face financial ruin because you want a damn education.”

Senate Majority Leader Charles Schumer, D-N.Y., said on the Senate floor, “Republicans talk a big game about helping working people, but today’s case before the Supreme Court — pushed by Republican office holders who oppose the president’s plan — is a slap in the face of working Americans across the country, young and old alike. Let me be clear, 90% of relief going to out-of-school borrowers will go to those earning less than $75,000 per year.”

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