In the waning hours of its most recent campaign against a thriving modern society, the Supreme Court invalidated the Biden administration’s student debt cancellation program. Beyond directly plucking money from the pockets of tens of millions of borrowers, the decision signaled the continued willingness of the Court to substitute its own judgment for that of executive agencies and to impose its own policy preferences on the country. To help sort through the meaning and implications of this ruling, we asked Louise Seamster, Blake Emerson, Marshall Steinbaum, Ryann Liebenthal, Jonathan Glater, Persis Yu, and Luke Herrine for their initial reactions.
In Biden v. Nebraska, the Court has continued its troubling trend of ignoring basic facts to reach the political outcomes it prefers. In this instance, it’s worth reflecting on the imaginary harms that constitute the Court’s final basis for standing.
Writing for the majority, Roberts claims that MOHELA’s putative economic harm from losing some borrower accounts would become harm to Missouri—even though, as colleagues and I have shown, any losses would be more than offset by other gains. In her dissent, Kagan notes any loss by MOHELA does not pass through as harm to Missouri, and that therefore MOHELA itself would be the proper plaintiff. Maybe because SCOTUS keeps hearing half-baked cases without any actual discovery process, all parties to this lawsuit left out a basic fact about MOHELA. In the loan servicers’ most recent federal contract to service loans, the agency explicitly agrees not to contest its account allocations. MOHELA is just a functionary, gaining and losing accounts according to the Department of Education’s sole discretion.
In any case, the only harm being alleged here—the harm ostensibly worth ending debt relief for 43 million Americans—is that “the Secretary’s plan will cut MOHELA’s revenues, impairing its efforts to aid Missouri college students.” To this end, Roberts notes “MOHELA has provided almost $300 million in grants and scholarships for Missouri students.”
This final version of injury is extraordinarily cynical—that it’s Missouri students themselves who would suffer harm from debt relief if it potentially meant fewer scholarships from MOHELA’s profits. So which would provide more help, up to $20,000 in debt relief, or MOHELA’s theoretical extra revenue from loan servicing? In September, the White House released numbers of borrowers in each state eligible for debt relief. It estimated Missouri had 777,300 income-eligible federal student loan borrowers, almost two-thirds of whom had received Pell Grants. If 75% of Missouri’s eligible borrowers applied for debt relief, as the White House estimated, they would only have to get $515 each in relief to add up to $300 million worth of principal reduction, more than MOHELA has “granted” to Missouri students over its whole existence. Yet we are supposed to believe Missouri was trying to protect students’ economic wellbeing by striking down this policy.
In order for MOHELA to accomplish its mission of directing profits to help students, we are told SCOTUS had to overturn student debt relief, because it might theoretically lower revenues to MOHELA, some of which might have gone to help students. There’s a lesson here on why debt cancellation is so different from standard higher education financing reform. Policy that actually helps students will necessarily undermine ineffective policies designed to provide the ongoing appearance (and moral credit) of “doing something to help.”
It wasn’t a big surprise that the Supreme Court invalidated the Department of Education’s debt cancellation program, but it was a surprise how assertively Biden responded. Yes, there were serious problems with standing, since the petitioners’ strongest theory was an injury to a third party who had not challenged the program. But that wasn’t an insurmountable obstacle for a court that uses standing selectively to avoid cases it doesn’t want to hear. And, sure, on the merits, it seems like a stretch to argue that the Education Secretary’s power to “waive” and “modify” provisions of the student loan program doesn’t give them the power to forgive debt. But when you’ve got a new rule that says agencies can’t do big stuff, fear not: textually explicit authority need not detain you! The Justices can’t agree on a justification for this new and ever expanding “major questions doctrine”—perhaps it’s the originally dubious nondelegation doctrine, perhaps an attempt to uphold the separation of powers by judicially interfering with both legislative and executive power, or perhaps it’s the “context” provided by the Justices’ own ideological disposition. Whatever it is, it’s precedent, so get over it.
But I honestly didn’t expect (even if I hoped) Biden to respond as forcefully as he did—by immediately invoking a different statute, the Higher Education Act, to attempt to forgive the debt again. The HEA includes yet more expansive waiver authority—“modif[y]” as well as “compromise, waive or release” claims against borrowers. The statute requires the Department of Education to go through a fairly onerous “negotiated rulemaking” process, above and beyond the ordinary notice-and-comment process, in which representatives of affected interested help to formulate the rule in committee. If the Biden Administration is smart, it will deploy the process to showcase both the merits of debt relief and of the deliberative processes of which the Executive Branch and the regulatory state are capable. They can use the rulemaking process to keep public attention on the predicament faced by student borrowers, and the problem of saddling young people with the cost of an education that has clear benefits to the public as a whole. Rulemaking can ventilate and respond to reasonable if mistaken criticism that debt relief is somehow unfair or creates an unjustified “moral hazard.” The administrative process was designed to serve this democratic function.
Beyond the merits of student debt forgiveness, it is encouraging that the Biden Administration is refusing to acquiesce in the Court’s attempt to usurp policymaking power from Congress and the Executive. Such rhetorical and institutional resistance will be necessary to advance any number of pressing priorities against a hostile court, from labor rights and climate change to antitrust regulation and civil rights. The Constitution does not make the Court the sole or final interpreter of the Constitution and laws. And it certainly doesn’t make it the arbiter over how “major” legislative and executive policies may be. We are in an era of constitutional confrontation among the three departments of government. It’s encouraging that the Biden Administration seems to be ready to join the fray.
The Court’s decision to strike down the administration’s student debt cancellation plan is another step forward in the federal judiciary’s mission to arrogate more and more political power to itself. This pattern of aggrandizement includes, among other decisions, a ruling by a district court judge earlier this year overturning the FDA’s authorization of medication abortions, as well as recent decisions in which the Court has decided that it (rather than OSHA) should regulate workplace safety and it (rather than the CDC) should decide what is necessary to prevent the spread of communicable diseases. Ideological opponents of the FTC’s proposed noncompete rule have similarly signaled to their allies in the judiciary that the power to ban noncompete agreements was not expressly delegated to the FTC, an opening for the Court to grant itself veto power over that agency’s actions as well.
What’s telling about this particular judicial power grab is how closely it mirrors the elite conventional wisdom that made cancellation controversial in the first place. Indeed, the Supreme Court majority sounds a lot like the president himself, when he denigrated universal cancellation by saying that he would not “forgive the debt, the billions of dollars of debt, for people who have gone to Harvard and Yale and Penn.” John Roberts even cited Nancy Pelosi for the claim that the Education Department does not have the authority for blanket cancellation, a comment she made as part of the political jockeying over whether the administration should move forward with administrative cancellation in the first place.
But reality is not to the Supreme Court’s, Biden’s, or Pelosi’s liking: the reason universal cancellation is necessary is because most outstanding debt won’t be repaid anyway, it will just ruin a lot of lives in the meantime. Roberts’s opinion asserts that student debt cancellation is in the “wheelhouse” of Congressional appropriations committees as opposed to the department. He thus presumes that debt cancellation amounts to a fiscal expenditure. In reality that expenditure occurred when unrepayable loans were issued, a mess the department was attempting to clean up when it tried to cancel debt.
That reality is at odds with conventional wisdom among politicians, rich people, and most scholars who study higher education, because they conceive of the higher education system as one that both ascertains and assigns merit at the individual level, a necessary buttress to the societal myth of meritocracy rationalizing extreme inequality. John Roberts will permit the Education Department to administer its loan portfolio so long as it does so in a way that accords with his, and his class’s, understanding of what higher education exists to do: dole out badges of deservingness. As Louise Seamster notes above, the logic of the ruling is that by taxing all student borrowers, MOHELA can continue to fund financial aid for a select few; that’s of a piece with how individual universities see themselves (it’s fine to be an exclusive country club as long as some of the membership fees are sprinkled over a select few worthy admits in the form of financial aid), as well as how higher education experts see the Department of Education (Income-Driven Repayment is superior to universal cancellation because it’s “targeted.”)
There’s a reason John Roberts’s favorite historical analogy when it comes to student debt places himself in the role of Louis XVI: his job is to prevent the political system from altering the social order. But there’s a reason expert agencies like the Department of Education exist: it knows better than he does how to administer the student loan portfolio, even if doing so runs counter to how lifetime-appointed officials who went to the same prep school think the world works. Unfortunately, he just made their job a lot harder.
In their ruling on student-debt cancellation, six of the Supreme Court’s justices put a hypothetical question to the Congress of 2003: “Can the Secretary use his powers to abolish $430 billion in student loans, completely canceling loan balances for 20 million borrowers, as a pandemic winds down to its end?” And then, because this is to them merely an academic exercise, they answer in Congress’s stead: “We can’t believe the answer would be yes. Congress did not unanimously pass the HEROES Act with such power in mind.”
Whether that’s true is essentially immaterial—like the rest of us, the conservative justices have no way of knowing. But, regardless, there are some profound ironies here. Perhaps the most salient one is that if you asked the Congress of 1965, the one that created those loans, if they ever intended for their program to grow to the size it is today, they would surely be aghast at the metastasization of their creation.
Today, college students and graduates hold roughly $1.6 trillion in debt. Student loans burden some 45 million Americans—about one in every six adults. The vast majority of them hold loans either issued or guaranteed by the federal government—loans under various programs and payment plans, whose common ancestor is the Guaranteed Student Loan Program (GSLP) created by Lyndon Johnson and an overwhelmingly Democratic Congress when they passed the Higher Education Act (HEA) in 1965.
The GSLP was intended to provide a liquidity stopgap for middle-class families who couldn’t afford to send their children to college on their savings and couldn’t get (much more expensive) loans from commercial banks. The HEA also included separate benefits directly aimed at poorer families—grants, work-study, and a small pre-existing program of loans capped at 3 percent interest and with a built-in forgiveness mechanism. These benefits were supposed to take care of low-income students entirely.
And yet, by 1968, just three years after the HEA was authorized, an Office of Education report found that nearly a third of all GSLP funds—then about $700 million—were going to students whose families made less than about $50,000 in today’s dollars, even though they should not have needed to rely on the GSLP in the first place. To remedy this, officials said, would require “vastly greater funding of the grant program and the work-study program.”
In 1972, Congress did just that—instituting the Pell Grant, which gave students up to $1,400 a year, an amount then sufficient to cover tuition and even some living expenses at the average public institution. But they also continued to reauthorize and expand the GSLP, and as states began to cut their own education funding, tuitions rose, and loans soon dwarfed all the rest. Even at the time, legislators sounded the alarm in Congressional hearings about the coming loan crisis, worrying in a very 1970s way about students someday amassing “negative dowries” of debt at the level of $20,000, even $100,000. In response, an education official offered reassurance that he really didn’t expect many people to take full advantage of the loan program—even as evidence mounted to the contrary.
Of course, Congress could have given the ax to the student loan program at any point, and never did. Instead, they expanded it, while also creating various limits and escape routes—legislating into existence the Public Service Loan Forgiveness program, for instance, and delegating authority to the executive via the HEROES Act. But if the Court wants to pretend it can read the mind of a bygone Congress, why end its séance at 2003? Why not ask: Would the legislators of 1965 have created a loan program that would someday grow to be the second-largest source of consumer debt, with no hope of relief, even in a time of national crisis? I can’t believe the answer would be yes.
The decision against cancellation reveals two important facts about the conservative majority on the nation’s highest court: the justices remain willing to engage in partisan decisionmaking that flouts prior decisions, and they are not yet worried about consequences of their decisions for the legitimacy of the Court.
Like every case that reaches the Supreme Court, this one afforded the conservative justices an opportunity to pursue ideological objectives. On an institutional level, critics of the “administrative state,” who have questioned whether the constitution allows for agencies sufficiently powerful to draft and enforce the rules that govern myriad aspects of the economy and our lives, here had a chance to rein it in. By ruling against the Education Department, the majority put other and future agency actions at greater risk.
At the level of partisan politics, cancellation of student debt has been a stated policy goal of an executive who is a member of the Democratic Party. The case thus also gave the justices an opportunity to further a purely partisan objective, to undermine a political opponent.
Of course, to appear partisan risks undermining the credibility of the Supreme Court. The willingness of the conservative justices to take a possible institutional hit suggests that concern over institutional legitimacy does not operate as a constraint. The conservative justices do not seem worried that, for example, Democrats will try to pack the Court. Time will tell whether this complacency is misguided, as the White House ramps up attacks on the Court and a good share of a generation of young people comes to associate the institution with partisan deprivation and denial rather than pursuit of neutral justice.
Too little attended to by the majority is the substantive policy challenge of tens of millions of indebted student borrowers who confront payment obligations that they cannot afford. In the absence of relief, the consequences of failing to assist them will reverberate for years to come – and in combination with the ruling against consideration of race in admissions, the decision in Biden v. Nebraska further hinders policy efforts to make higher education more accessible for people who are members of groups historically excluded from higher education opportunities.
On the final day of its term, the Supreme Court issued a vibes-based opinion invalidating President Biden’s student debt relief plan without any consideration of the 40 million student loan borrowers whose finances the Court put in jeopardy. Put simply: this decision was wrong on the law, and it was wrong on the facts—ignoring entirely the immediate need for a program of this scope and mischaracterizing the tools that President Biden and Secretary Cardona have to deliver relief.
This leaves President Biden with a choice: walk away from the fight to deliver student debt relief or look elsewhere in federal law for the authority to carry out this plan. Fortunately for borrowers, for the rule of law, and for the economy, President Biden appears willing to choose the latter tack. But he must do so swiftly and use all of the tools at his disposal.
To be clear, President Biden’s program was legal under the HEROES Act. The High Court got it wrong. In dicta, Chief Justice Roberts takes great note of the fact that this program was unprecedented in scope. But as Justice Kagan appropriately retorts in her dissent—so was the emergency the program was designed to address. The Chief Justice inserts words into the HEROES Act that do not exist—noting that under the HEROES Act ,“[t]he Secretary may issue waivers or modifications only ‘as may be necessary to ensure’ that ‘recipients of student financial assistance under title IV of the [Education Act] who are affected individuals are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals.’” (Emphasis added.)
But the word “only” never appears in the HEROES Act. “As may be necessary to ensure” is meaningfully different from “only” where necessary. It describes an authority that is broad and expansive and allows the Secretary to do what he needs to do to guarantee that borrowers get the relief they need.
The Chief Justice also notes that “Congress opted to make debt forgiveness available only in a few particular exigent circumstances.” Again, wrong.
There are some specific exigent circumstances in which the Higher Education Act (“HEA”) provides for cancellation—such as disability, death, the closure of a school while the student is in attendance—however, Congress has given the Secretary broad authority to settle, modify, release, and compromise federal student loans. The Federal Claims Collections Act (“FCCA”) also gives federal agencies wide discretion to manage their portfolios.
What the Chief and many pundits get wrong in their wild gesticulations about the extraordinary nature of President Biden’s debt relief program is that cancelling or writing down debts is a normal and routine tool for creditors to use to mitigate the financial distress of their customers and manage their portfolios.
Luckily, the Court ruled narrowly last week. The question before the Court—and (aside from standing) the question that was answered—was simply: was President Biden’s debt relief plan authorized by the HEROES Act? Obviously, I think the Court answered that question wrong. However, the Court left Biden with a clear path to pursue relief to borrowers through alternate authority under the HEA as he announced immediately following the Court’s ruling.
President Biden is not, however, limited to developing this program through a negotiated rulemaking. The HEA allows the Secretary to forgo a negotiated rulemaking where he determines that it would be “impracticable, unnecessary, or contrary to the public interest.” Given the economic devastation the Administration says cancellation is necessary to head off, Secretary Cardona should implement a version of this plan using an interim final rule before payments turn back on in the fall. Biden can also issue executive orders on discrete borrower populations using the FCCA—such as those who have already been promised debt relief and those who the Administration knows would qualify or would have the hardest time making payments when the system turns back on.
None of these actions foreclose a broader negotiated rulemaking; however, the moment demands that President Biden act fast, and the law and the court’s decision permit him to do so.
Suppose the Court had gone the other way. Supposed, further, that the Department’s means-testing spandrel had gone off without a hitch and further legal challenges had fizzled. Where would we be?
In a better world, surely. Maybe half of student debtors would see a full jubilee—including many of those already least able to pay. (Tens of) millions more would find repayment more manageable. Everybody else would find themself asking again, with more urgency, why we still have this bizarre surtax on learning. As a bonus, administrative and justiciability jurisprudence would be on firmer ground.
But it would still be a world with tens of millions of student debtors, many of whom would have experienced the Biden Jubilee as just a puff of air escaping from the balloon of compound interest slowly filling their financial lives. The Department of Education would be revving up its rickety collection machine again. Colleges would continue to raise tuition; state governments would continue to pare budgets; enrollments would continue to drop; liberal arts education would continue to become a luxury reserved for elites (again); affirmative action would still be outlawed; history and art and philosophy and many other departments (not to mention remedial programs meant to correct for the injustices of our K-12 system) would still be closing their doors. In short, we would still be faced with a crisis in higher education.
This is also where we will be if Biden’s alternative makes it through an yearslong regulatory process, Congressional Review Act challenges, and an avowedly hostile Supreme Court. Student debt cancellation via the executive branch—even had it come in a more full-throated form than Biden’s means-tested delayed-onset write-down—was always only a down payment toward a more comprehensive reimagination of higher education finance.
That reconstruction can only take place in Congress. We do have a Progressive Caucus that is gingerly taking up that cause, egged on by a growing movement of grad students and faculty joining hands with student debtors. Only if the latter movement grows and finds allies does it have any hope. Surely it is a boon to that cause that Biden now sees student debt as a potential problem for his electability and will be running a regulatory process to cancel it while talking mess about the Supreme Court during his reelecction campaign. Perhaps paradoxically, even if the Biden Jubilee never gets enacted, the attempt may lay the groundwork for something better.