A Skeptical SCOTUS Reception for Student Loan Challenges

The Supreme Court heard oral arguments in the pair of cases challenging President Biden’s student loan forgiveness plan on Tuesday, February 28. While the underlying issues are far from decided, the Justices’ arguments strongly favor the administration, especially surrounding the parties standing to sue. First up was Biden v. Nebraska, a challenge from several state governments, followed by Dept. of Education v. Brown, a challenge from would-be applicants who didn’t qualify for all the program’s relief. Neither one seemed likely to overcome standing arguments by day’s end.

Student Loan Forgiveness, Actual Damage to the State?

Perhaps the case most likely to pass the standing issue was Missouri (as part of a coalition of states headed by Nebraska) due to its Office of Higher Education Loan Authority (MOHELA). Actual damages are a crucial component in who may sue. For instance, the plaintiffs’ claim in Brown is likely to fail because those bringing the suit are not injured simply because they are ineligible to participate in a particular debt relief plan. As long as that participation is not based on illegal discrimination – on race or sex, for instance – there is no injury. Because MOHELA services student loan payments, they may suffer injury through lost revenue and, thus, have standing to sue.

Solicitor General Elizabeth Prelogar contested the state’s standing, however, to act on MOHELA’s behalf. Justice Samuel Alito questioned that stance, asking: “So I understand a big thrust of your argument to be that Missouri lacks standing because MOHELA is separately incorporated. But why should that formal distinction govern the determination of injury in fact?”

“[W]e definitely have the better argument of the first principles here based on the propositions I mentioned earlier, including those that generally make clear that the Court won’t countenance third-party claims seeking to invoke rights and interests of individuals or entities that aren’t before the Court,” Prelogar replied. “And I think it would be particularly anomalous to recognize some kind of exception to those principles here.”

Justice Amy Coney Barrett asked the Nebraska Solicitor General James Campbell:

“Why didn’t the state just make MOHELA come then? If MOHELA is really an arm of the state and all of this would be a lot easier – I mean, the Solicitor General conceded that if MOHELA was here, MOHELA would have standing. If MOHELA is an arm of the state, why didn’t you just strong-arm MOHELA and say you’ve got to pursue this suit?”

Campbell said it “was a question of state politics.” While true, it seems unlikely to sway the Supreme Court, especially the conservative members. They are the ones, after all, that want to be torch-bearers for limited judgments from the lower courts and are more restrictive about matters of standing. Other reasons beyond standing might cause a conservative justice to disfavor the lower court’s universal injunction. Several Justices, including Clarence Thomas, have written critically of lower courts imposing sweeping nationwide injunctions. On Tuesday, Justice Neil Gorsuch and General Prelogar had this exchange:

Gorsuch: “General, I appreciate your standing arguments and they’ve been laid out very clearly here. An interesting feature of this particular case is – as you well know, is that the Court entered a universal decree. We’ve chatted about this in prior cases.”

Prelogar: “We have, indeed, Justice Gorsuch.”

Gorsuch: “And I just wanted to give you another chance to talk about universal vacatur with some of my friends here.”

Prelogar followed up with an explanation of why a nationwide injunction was not appropriate relief here. It was another in a list of good reasons that a Justice on the Court’s conservative bloc might vote for the Biden administration in this case.

(Photo by Drew Angerer/Getty Images)

What About the Little Guy?

Chief Justice John Roberts addressed the question of fundamental fairness. He said, “Nobody’s telling the person who is trying to set up the lawn service business that he doesn’t have to pay his loan. He still does, even though his tax dollars are going to support the forgiveness of the loan for the – the college graduate, who’s now going to make a lot more than him over the course of his lifetime.” Prelogar said requiring such consideration would cripple the ability to legislate: “Congress can’t look ahead to the future and say, okay, in the year 2020, when an unprecedented global pandemic hits, we’ve decided that the lawn care professional should, you know, not benefit from this program, but the student-loan borrower should.”

The Court is expected to issue rulings on these loan forgiveness cases this spring.