What to expect from the Supreme Court on Biden’s student loan cancellation

This week, the Supreme Court will hear oral arguments on two legal challenges to President Biden’s student loan cancellation plan. If allowed to continue, the administration’s proposal will deliver as much as $20,000 in student loan forgiveness to borrowers. The parties challenging the White House’s plan will have two distinct arguments to make: first, that they have the right to bring suit against the administration and second, that the act of canceling student debt, as has been proposed, is unlawful.

The first obstacle in getting the court to rule Biden’s plan as unlawful is for the parties suing the administration to prove that they have the “standing” to do so. To have standing, a party must prove they have or will experience damages as a result of the administration’s actions. While the will to bring suit against the student loan forgiveness effort has been plentiful, the instances where parties could prove concrete damages were few and far between.

In the two cases being heard on Tuesday, each party makes a different claim of standing. In the first, brought by a group of Republican-led states, the states argue that the cancellation plan would cause them to lose revenue; they previously collected revenue from federal student loans by operating guarantee agencies, which play a role in servicing (i.e., collecting repayment on) older federal student loans — namely, Federal Family Education Loan Program loans. They also argue that the forgiveness would have tax implications, reducing state revenues.

The second case, makes a more abstract argument: that the arbitrary nature of Biden’s plan — which grants $20,000 in forgiveness to some borrowers, $10,000 to others, and leaves some borrowers without any eligibility to have their loans forgiven — would damage those borrowers who aren’t eligible for the full $20,000 in forgiveness.

The administration argues that neither case has legitimate standing and that the cases should be dismissed from further consideration. Assuming that the court decides otherwise, the consideration of the case will move into the more fundamental argument of whether the White House even has the authority to carry out such a program without the support of legislation.

The White House claims that a 2003 law, the HEROES Act, gives them the authority to cancel student debt. HEROES, initially put in place during the Iraq war to provide relief to service members and their families, gives the Secretary of Education the explicit authority to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” under Title IV of the Higher Education Act “as the Secretary deems necessary in connection with a war or other military operation or national emergency.” It’s clear that the secretary has some authority to modify loan terms, but there’s disagreement about whether the White House’s plan exceeds the authority granted by that law.

In an amici curiae brief filed in support of the case next week, three Republican co-sponsors of the 2003 law — former Rep. Howard “Buck” McKeon, former Rep. John Kline, and former House Speaker John Boehner — argue that the law they authored does not grant the Secretary of Education the authority to cancel student debt altogether, but rather gives them the authority to modify loan regulations — and only for borrowers directly impacted by the national emergency at hand.

But their Democratic colleagues who co-sponsored or voted for that legislation almost two decades ago apparently hold another view. Former Rep. George Miller explained recently in an opinion piece for The Washington Post that the law did, in fact, intend to allow the secretary to cancel student debt altogether, and also that the COVID-19 pandemic offers an appropriate impetus for the intervention.

It’s unclear whether the lawmakers actually foresaw the attempted use of HEROES to justify a blanket cancellation plan at the time the law was passed, but in retrospect, both parties seem to vehemently disagree about what was originally intended.

Now, it will be up to the nine Supreme Court justices to decide — both whether the parties demonstrate damages and whether the administration is acting within its authority as it attempts to take the unprecedented act of canceling student debt for millions of borrowers. The court likely will hear arguments in the case in front of a packed house. A ruling could come any time after the arguments, but most expect the decision will come in June, when the court issues most of its major decisions.

Beth Akers, Ph.D., is a resident fellow at the American Enterprise Institute and former staff economist with the Council of Economic Advisers during the George W. Bush administration. Follow her on Twitter @DrBethAkers.