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The legal fight that could kill Biden’s student debt relief plan, explained

The program is almost certainly legal, but that fact is unlikely to persuade a judiciary dominated by his partisan foes.

President Joe Biden is introduced by Zachary Bernard, a senior at Delaware State University, before speaking about student debt relief on October 21 in Dover, Delaware.
Anna Moneymaker/Getty Images

I regret to inform you that we’re back to the will-it-happen-or-not phase of President Joe Biden’s plan to forgive student debt — but this time it’s not his fault. On Thursday, a Trump-appointed judge in Texas became the first judge in the country to declare that the program is invalid.

The program, which was announced this summer and which would provide some borrowers with as much as $20,000 in debt relief, was already under legal assault.

Last month, the conservative United States Court of Appeals for the Eighth Circuit temporarily prohibited the Biden administration from “discharging any student loan debt” under the program. That case is known as Nebraska v. Biden.

Again, the order in Nebraska is temporary — it appears designed to pause the program while the court figures out whether or not to strike it down — but it is an extraordinarily ominous sign for Americans hoping to benefit from the program. Although the Eighth Circuit has not yet ruled on whether the program is lawful, its order suspending the program remains in effect.

Now this week, Judge Mark Pittman, the Texas judge, has gone one step further. His decision in Brown v. Department of Education rests on the so-called “major questions doctrine,” a doctrine, largely invented by Republican appointees to the federal judiciary, which the Supreme Court’s current majority has invoked to strike down policies supported by President Joe Biden.

Although there are few good arguments that the debt relief program violates federal law as written, it is entirely possible, even perhaps likely, that Pittman’s view of the program will ultimately prevail in a judiciary dominated by Republican appointees.

Biden announced the loan cancellation program in August. Under its terms, many borrowers who earned less than $125,000 during the pandemic should receive up to $10,000 in student loan forgiveness. Borrowers who received Pell Grants, federal grants that target low-income college students, may receive as much as $20,000 in debt forgiveness.

The program is almost certainly permissible under a post-9/11 law known as the Heroes Act, which gives the Secretary of Education broad authority to “waive or modify” many student loan obligations “as the Secretary deems necessary in connection with a war or other military operation or national emergency.” The relevant “national emergency” is the Covid-19 pandemic and the global economic disruption that emerged from the pandemic.

In the previous administration, President Donald Trump ordered then-Secretary of Education Betsy DeVos to temporarily suspend payments “on student loans held by the Department of Education,” in order to alleviate some of the financial strain on student loan borrowers caused by the pandemic. Federal law permits the secretary to suspend payments for up to three years for borrowers experiencing “economic hardship.”

Now that the most severe phase of the pandemic appears to be over, the Biden administration plans to resume student loan payments in January 2023, It coupled that resumption of payments with permanent student loan forgiveness for many borrowers.

Almost immediately after Biden announced the forgiveness program, however, Republicans and other ideological conservatives began scheming for ways to block this program in court. The Nebraska lawsuit currently pending in the Eighth Circuit was brought by five Republican state attorneys general and one Republican state governor.

One of the biggest legal obstacles facing these Republican litigants is “standing,” the requirement that anyone who challenges a government policy in federal court must be able to show they were injured in some way by that policy. It is unclear whether anyone is injured by a policy that reduces some people’s debt loads and that does nothing to most Americans.

Nevertheless, opponents of Biden’s loan forgiveness program have a very good chance of prevailing eventually, as the Supreme Court’s GOP-appointed majority has spent the last several years seeking to maximize its own authority to invalidate executive branch actions it might disagree with.

The Heroes Act gives the Education Department sweeping discretion to modify student loan obligations when an emergency arises

The Heroes Act was enacted in 2003, not long after the 9/11 attack on the World Trade Center, and as America was ramping up its decades-long wars in Iraq and Afghanistan. The law promises financial assistance to members of the military who “put their lives on hold, leave their families, jobs, and postsecondary education in order to serve their country.”

Yet, while the immediate purpose of the Heroes Act was to provide student loan relief and other assistance to service members, the law also gave the secretary of education broad authority to provide relief to student loan borrowers impacted by future military operations or disasters. Congress apparently believed that, rather than requiring a new act of Congress every single time a large group of Americans should receive student loan relief, it was better to permanently empower a political official to grant such relief when they deemed it appropriate.

The law enables the secretary to “waive or modify” federal student loan obligations “as the Secretary deems necessary in connection with a war or other military operation or national emergency.” It defines a “national emergency” to include anything that the president declares to be such an emergency (such as the Covid-19 pandemic), and it states explicitly that the secretary “is not required to exercise the waiver or modification authority under this section on a case-by-case basis” for each individual student borrower.

Congress, in other words, made several very explicit choices. First, it determined that the president alone shall have the unilateral authority to determine when a national emergency exists that is sufficiently grave to activate the secretary’s loan cancellation authority. Second, once that authority is activated, the law states that loans may be waived or modified “as the Secretary deems necessary.” Congress chose to vest discretion over who should receive student loan relief in a very specific individual within the executive branch — and it rather pointedly did not give this authority to the judiciary.

Finally, Congress was quite clear that the secretary’s authority extends beyond the most acute phase of a national emergency. The law states that the secretary may act “in connection with” an emergency, rather than using narrower language that might constrain the secretary’s authority more, like if Congress had placed temporal or similar restrictions on when the secretary may act. And it states that one purpose of the secretary’s loan cancellation authority is to ensure that student borrowers impacted by a national emergency “are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals.”

All of which is a long way of saying that the Biden administration stood on very firm legal ground when it announced its new student loan cancellation program.

Congress, moreover, must have known that, in giving this broad discretion to a presidential appointee, this appointee might wield that authority in ways that the opposing party disagrees with — or that the president’s opponents view as excessively political. And yet Congress chose to accept this risk, believing that it was better to ensure that people who deserve loan relief receive that relief.

The courts are unlikely to care what the Heroes Act actually says

The Heroes Act was not controversial when it became law — it passed the Senate by unanimous consent, passed the House by a 421 – 1 vote, and was signed by President George W. Bush, a Republican. Nevertheless, there is a real risk that the courts, which are dominated by Republican appointees, will override Congress’s near-unanimous judgment and invalidate Biden’s student loan relief program.

The reason why is something known as the “major questions doctrine,” an ill-defined legal doctrine mentioned nowhere in either the Constitution or in any federal statute, and that appears to have been entirely fabricated by members of the judiciary.

Under this doctrine, the Supreme Court explained in a 2014 opinion, courts may invalidate a federal agency’s actions if they determine that this action touches upon a matter of “vast ‘economic and political significance.’”

Technically, the major questions doctrine permits Congress to empower agencies to decide questions of great significance if Congress uses sufficiently precise language. But the Court has never said just how precise that language must be. And the whole point of statutes like the Heroes Act is to give agencies discretion to act when unexpected events occur. A requirement that Congress must define an agency’s powers with extraordinary precision defeats that purpose.

The Supreme Court also has not explained what constitutes a matter of “vast economic and political significance.” And the Court’s decisions suggest that the answer to this question is largely arbitrary — and hinges more on whether five justices wish to veto an agency’s actions than on whether that agency has actually done something of particular importance.

Take, for example, the Court’s decision in West Virginia v. EPA (2022). That case involved the Obama administration’s Clean Power Plan, a 2015 policy that set emissions reduction targets that the energy industry was supposed to hit by 2030.

But the Clean Power Plan proved to be a total dud. For one thing, it never took effect — the Supreme Court voted along party lines to suspend it in 2016. More importantly, it appears that nothing significant would have changed if the Clean Power Plan had gone into effect.

That’s because many energy producers decided to shift away from coal-fired plants with high levels of emissions to cleaner technologies, not because the government required them to do so but because coal-fired plants are more expensive to operate than cleaner plants. Thanks in large part to good ol’ free market capitalism, the energy industry wound up meeting the Clean Power Plan’s 2030 targets 11 years early, in 2019.

And yet, in West Virginia, the Supreme Court deemed this nothingburger regulation to involve matters of such vast economic or political significance that it must be struck down.

So the major questions doctrine has no clear substance and does not operate in any predictable way. As Justice Elena Kagan wrote in her West Virginia dissent, the doctrine functions as a “get-out-of-text-free” card, which permits her Court to act as it pleases when the text of a federal law might undermine a majority of the justices’ “broader goals.”

Thus, if a majority of the Supreme Court wants to invalidate Biden’s loan relief program, they already claimed the power to do so for purely arbitrary reasons in cases like West Virginia. And six of the Supreme Court’s nine seats are held by Republicans, all of whom have already wielded this substance-free doctrine to invalidate Biden administration policies on subjects ranging from vaccination to evictions.

It is far from clear whether anyone is allowed to file a lawsuit challenging the loan cancellation program

One of the biggest legal obstacles facing anyone who wants to challenge the Biden administration’s loan forgiveness program in court is that it is far from clear that federal courts are allowed to hear such a lawsuit. As the Supreme Court held in Lujan v. Defenders of Wildlife (1992), no one may file a federal lawsuit challenging a government policy unless they have suffered an “injury in fact” that is “fairly traceable” to the policy that they are challenging — a requirement known as “standing.”

But who, exactly, is injured by this federal loan policy? Most Americans aren’t impacted in any way by the loan cancellation policy, and those who do qualify for loan forgiveness should be better off than they would be in the absence of the policy — because they will have less debt.

Nevertheless, the various plaintiffs challenging the loan cancellation program have each offered fairly baroque arguments that they are somehow worse off because of this program.

In the Nebraska case, for example, several of the plaintiff states argue that they are worse off because the loan forgiveness program encourages student borrowers who received loans under the Federal Family Education Loan Program (FFELP) — a program that stopped issuing new loans in 2010 — to convert those loans into something known as a “direct” loan. FFELP borrowers may convert those loans into direct loans at no cost, but under the Biden administration’s loan forgiveness program, FFELP borrowers must convert their loans to direct loans by September 29, 2022, in order to qualify for forgiveness.

The plaintiff states essentially argue that they have invested in FFELP loans and that they will not receive as much money from these investments if borrowers convert their FFELP loans into direct loans. Thus, they claim, they are financially worse off because of the loan forgiveness program and have standing to challenge it in federal court.

The problem with this argument, as Judge Henry Edward Autrey explained in an opinion dismissing the Nebraska case, is that the September 29 deadline for FFELP borrowers to convert their loans into direct loans has already passed. Thus, the loan cancellation program creates no “ongoing incentive” for FFELP borrowers to convert their loans into direct loans, and the states will not be injured by the loan cancellation program even if they are heavily invested in FFELP loans.

Meanwhile, in a different lawsuit, an attorney at a conservative litigation shop claimed that he will be worse off if his loans are canceled under the Biden administration’s program because the unusual tax regime in his home state of Indiana would require him to pay higher state taxes if his loans are forgiven under the new program. But the Biden administration clarified shortly after this lawsuit was filed that people eligible for loan forgiveness may opt out, thus rescuing this plaintiff from paying higher state taxes — and eliminating any injury he may have experienced as a result of the loan forgiveness program.

The plaintiffs in Brown, meanwhile, essentially argue that they have standing because they were denied an opportunity to tell the Secretary of Education their opinion about how the loan relief program should have been designed, through a process known as “notice and comment.” The problem with this argument is that the Heroes Act explicitly permits the secretary to forego notice and comment when forgiving student loans.

It is possible, in other words, that all of the lawsuits challenging the student loan relief program could fail because no plaintiff can show that they were injured in any legally significant way by the program.

That said, while the standing requirement prevents federal courts from hearing cases where no one was injured, a plaintiff only has to show the smallest injury to overcome that requirement — if a bank or investor can show that they will lose a single penny because of the loan forgiveness program, for example, that would be enough. So the likelihood that Republicans and other opponents of the loan forgiveness program will eventually find some plaintiff who is invested in some obscure financial instrument, whose value drops when student loans are forgiven, remains fairly high. And once they find this unusual plaintiff and convince them to sue, that will be enough.

And that’s assuming that the courts apply the ordinary standing rules that apply to all other litigants. The fact that Judge Pittman ruled in favor of the Brown plaintiffs, despite their weak arguments supporting their standing to bring this suit, suggests that not all judges will concern themselves with the nuances of standing doctrine.

So how long will this all take to play out?

It is likely that the Eighth Circuit will move fairly quickly in the Nebraska case — Judge Autrey’s decision holding that the state plaintiffs lack standing to sue is currently before that appeals court. In its order temporarily halting the loan forgiveness program, moreover, the Eighth Circuit called for a tight briefing schedule.

The appeals court could ultimately agree with Autrey that the plaintiffs don’t have a reason to be suing. But the conservative Eighth Circuit — 10 of the court’s 11 active judges were appointed by Republicans — could also issue an order declaring the loan forgiveness program invalid under the major questions doctrine any day now.

Meanwhile, Pittman’s order will appeal to the archconservative United States Court of Appeals for the Fifth Circuit. It is very likely that the Fifth Circuit, arguably the Trumpiest court in the country, will affirm Pittman’s decision.

Should that happen, or should any other federal appeals court block the loan forgiveness program, the Biden administration will undoubtedly seek relief in the Supreme Court. The justices might rule on that request right away. But the Court might also deny immediate relief to the Biden administration and then sit on the case for months, leaving the lower court’s order blocking the program in effect for that entire months-long waiting period.

It may be a little while, in other words, before the Supreme Court hands down its final word on whether to permit the student loan forgiveness program to stand. But a lower court decision suspending the program could be handed down very soon. And, if that happens, the program may never actually take effect.

Of course, there are few good legal arguments against the loan forgiveness program. The Heroes Act is quite clear that the Education Department has broad authority to forgive student loans “in connection with” a historic crisis such as the Covid-19 pandemic.

But the Court’s “major questions” decisions make it clear that the Supreme Court doesn’t need a good legal argument to strike down a federal agency’s action. It only needs five votes.

Update, November 11, 1:05 pm ET: This story, originally published October 25, has been updated to include information about the Texas case challenging the student debt relief program, Brown v. Department of Education.