Blocking loan forgiveness isn’t so easy

Conservative justices may not like Biden’s debt cancellation, but they face a big legal snag.

Oral arguments before the Supreme Court on Tuesday in a much-watched student loan forgiveness case, Biden vs. Nebraska, pitted two of the conservative majority’s beloved legal doctrines against one another.

The case for striking down President Biden’s program, which would forgive about $400 billion in federal student loan obligations, turns on the court’s recently minted “major questions” doctrine. That doctrine, whose legal provenance is questionable and whose contours are still very much being worked out, holds that for “major” questions of “vast economic or political significance,” the court requires a clear statement of congressional intent rather than deferring to executive branch interpretations of the law.

In this case, given the undeniably large price tag of the forgiveness, the justices could employ their novel doctrine to find that the secretary of Education lacked the authority to forgive up to $20,000 in federal loan obligations per debtor.

The Biden administration did so under a provision of the pandemic-era Heroes Act authorizing the president to “waive or modify” “any provision” of the student loan program in the case of an emergency. The Trump administration used that provision to suspend loan repayment obligations at the height of the COVID contagion. The program at issue took the further step of broad forgiveness to realize Biden’s campaign promise to reduce American student debt, which exceeds even our total credit card debt.

But the court’s right wing has a dilemma. It became clear during the arguments that perhaps the strongest point in the Biden administration’s favor concerns legal standing, another matter close to the conservatives’ hearts. The court has insisted on strictly policing the constitutional requirement that the federal judiciary may hear only those cases in which the plaintiff has sustained an “injury in fact” — a concrete, particular harm.

Here that restriction is very much in play. Biden vs. Nebraska was brought by six Republican attorneys general who oppose student loan forgiveness for political reasons. That’s fine, but they still need to demonstrate an injury in fact. And none of the states seems to have sustained any sort of injury from student loan forgiveness: What’s it to them if the federal government doesn’t want its $20,000 back from any given borrower?

Missouri attempted to craft a standing argument based on its own Missouri Higher Education Loan Authority, known by the acronym MOHELA, which could at least potentially lose revenue due to loan forgiveness. The trouble is that MOHELA was set up as an independent corporation with its own power to sue and be sued, and it isn’t a party to this lawsuit. In fact, Missouri’s relationship with MOHELA is contentious enough that it couldn’t get documents from the agency without filing the state equivalent of a Freedom of Information Act request.

The court’s conservatives hold dear the basic legal principle that (barring a few exceptions not relevant here) a litigant has no standing to redress harms to a third party. As the Biden administration argues, that would lead to such expansive results as allowing banks to sue anyone who financially harms their borrowers.

Interestingly, the court has emphasized that both standing and the major questions doctrine are driven by the separation of powers. Standing constricts the judicial branch’s power, keeping it from encroaching on policy questions reserved for the political branches. And the major questions doctrine limits the power of the executive branch, preventing it from making big decisions that Congress hasn’t expressly authorized.

As many critics have noted, the major questions doctrine conveniently serves the court’s broader agenda of trimming the wings of the administrative state.

But to invoke that doctrine, the conservatives have to get around the issue of standing — which they have promoted as crucial to keeping their own branch in check.

The fault lines in Tuesday’s arguments were familiar. The court’s three progressives seemed inclined to uphold the program — with Justice Elena Kagan offering a particularly forceful defense of the forgiveness as clearly authorized by Congress — while the six conservatives sounded eager to use the major questions doctrine to strike it down.

But several lines of questioning seemed to probe the possibility that the three liberals could peel off two members of the conservative wing to hold that the challengers lack standing, which would make the case go away. Justice Amy Coney Barrett is a potential recruit to that cause based on her questions.

Justice Ketanji Brown Jackson had a particularly elegant line of questioning that emphasized the separation-of-powers underpinnings of both standing and the major questions doctrine, suggesting the court should maintain the same fidelity to the principle across the board.

The case thus comes down to whether the court will choose to stretch standing to strike down what it sees as an expansive exercise of administrative power for a purpose that, perhaps not coincidentally, Republicans disfavor.

The oral argument suggested that the progressives will be the standing hawks in this case while the conservatives will more likely strive to get to the merits and strike down the program. The result of this cerebral battle of legal doctrines could be a very real and rude surprise to the millions of Americans promised needed relief.