Thoughts on Today’s Supreme Court Student Loan Forgiveness Oral Arguments

Today the Supreme Court heard oral arguments in Biden v. Nebraska and Department of Education v. Brown, two cases challenging the legality of the Biden Administration’s plan to forgive over $400 billion in student debt, relying on the 2003 HEROES Act and the Covid-19 national emergency. The big issues in the two cases are whether the Administration has the power to grant loan forgiveness on such a vast scale, and whether the plaintiffs in the two cases (six state governments in one, two private parties that actually want the program to be broader in the other) have standing to challenge the program. I have previously gone over the substantive issues here and here, and standing here, here, and here.

While the outcome won’t be known for weeks, perhaps not until June, today’s oral arguments strongly suggest that all six conservative justices believe the loan forgiveness program is illegal, while the three liberals hold the opposite view. Things are less clear on the standing question. It is possible that Justice Amy Coney Barrett will join the three liberals in concluding that none of the plaintiffs have standing. But the other conservatives seem likely to rule that at least one (most likely the state of Missouri) does have it.

Various conservative justices repeatedly signaled they have doubts that the HEROES Act authorizes the Biden plan, both because the power to “waive or modify” student loan conditions does not include large-scale cancellation of debt principal, and because many of the 40 million potential beneficiaries of the plan are not actually “in a worse position financially in relation to” their student loan obligations as a result of the Covid-19 pandemic, as the statute requires in order for the power to “waive or modify” to be authorized by the Covid national emergency declaration. In my view, the latter is the biggest legal weakness of the plan.

Chief Justice John Roberts cited evidence indicating that more than half of the potential beneficiaries do not believe they will have any trouble repaying their student loans. Of the remainder, many have issues unrelated to the impact of the pandemic. While the Solicitor General Elizabeth Prelogar rightly pointed out that the statute does not require “case-by-case” assessment of each individual, such massive overreach—covering tens of millions of people and hundreds of billions of dollars—seems obviously beyond what the statute authorizes.

The conservative justices—and at least one liberal—also signaled they believe the “major questions doctrine”—which requires Congress to “speak clearly when authorizing an [executive branch] agency to exercise powers of vast economic and political significance”—is applicable here. Justice Sotomayor (who was sympathetic to the government on almost every other point), rightly pointed out that “the amount at issue, the Chief [Justice] mentioned the quarter [of] a trillion dollars or the half a trillion dollars… seems to favor the argument that this is a major question.”

None of the justices seemed sympathetic to Prelogar’s argument that the major questions doctrine applies only to regulations, but not to federal benefits. Chief Justice Roberts noted that this ignores the fact that the purpose of doctrine is  to protect separation of powers across the board. Justice Alito commented that “drawing a distinction between benefits programs and other programs seems to presume that when it comes to the administration of benefits programs, a trillion dollars here, a trillion dollars there, it doesn’t really make that much difference to Congress.”

The Court need not resort to the major questions doctrine to rule against the administration. It could just make that decision based on the text of the HEROES Act. But the doctrine raises the burden of proof the administration must meet. If the loan forgiveness policy qualifies as resolving a “major question” (and the immense size of the expenditure suggests