By Khandice Lofton and Winston Berkman-Breen | August 3, 2023
On June 30, 2023, the Supreme Court of the United States ruled in a 6-3 opinion in Biden v. Nebraska that the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) does not authorize the Secretary of Education to provide 40 million federal student loan borrowers financial relief, despite the fact that the law’s plain meaning clearly grants this authority when a national emergency, like a pandemic, calls for such action. Although the Court rightfully dismissed the related private suit brought by two borrowers in Department of Education v. Brown, it took Nebraska as an opportunity to make a politically motivated decision: to stop the Biden Administration from upholding its promise to borrowers across the country. In doing so, the Court struck down a program that would have benefited borrowers immensely in advance of resuming payments on their federal student loans in the fall of 2023.
The members of the Supreme Court’s conservative majority overstepped their constitutional duties by holding that the Secretary of Education has no authority under the HEROES Act to provide borrowers with student loan debt relief despite the lingering effects of the COVID-19 national emergency.
The conservative majority of the Supreme Court engaged in a series of legal acrobatics to first decide that Nebraska was properly before it as a case to be heard, and then to determine that a federal law that clearly gives the President broad authority to help student loan borrowers during national emergencies was not sufficient to authorize the administration’s debt relief plan. This decision invalidated a legal and much-needed program, and is the latest instance of the Court supplanting its own policy preferences for Congress’s and the Executive’s.
The Court never should have heard this case. As Justice Kagan—joined by Justices Sotomayor and Jackson—eloquently makes clear at the outset of her dissent, had the Court properly applied its own precedent and legal standards, this case would have been found to lack “standing”—the right to sue—and been dismissed just like Brown. This is the conclusion the federal District Court in Missouri reached when the case was first brought. But this Court instead jumped through hoops to make the attenuated argument that Missouri, if no one else, has the right to sue on behalf of MOHELA, although it was never a part of the lawsuit and is a separate and distinct entity that services student loans, because MOHELA was initially created by Missouri state law. According to the Court, this makes MOHELA a “public instrumentality” of Missouri, even though the oral arguments and written briefs made it clear that the company functions as a wholly separate corporation from the state, one that can sue and be sued on its own behalf and for which the state has never previously appeared in court.
Even MOHELA vehemently disassociated itself from the case. In internal emails sent among its employees, the company asserts that it “was opposed to this move, but couldn’t do anything about it” and that it “isn’t technically a part of that lawsuit.” Throughout the lawsuit, MOHELA did not cooperate with the Missouri Attorney General’s office, forcing the state to obtain MOHELA’s documents through public records requests. This is not how an instrumentality of a state generally behaves with the state itself.
Despite this clear separation between state and servicer, the Court held that Missouri could still sue on the company’s behalf to prevent the Secretary from providing relief to borrowers. It also determined that MOHELA would be harmed through lost revenue by the President’s debt relief program, and that that lost revenue constituted a cognizable harm sufficient to establish standing. This loss was always speculative, and has only continued to be called into question since the case was first filed, but the conservative justices nonetheless used it as the basis for their standing analysis.
After giving itself the vehicle to strike down the President’s debt relief program by finding that Missouri had standing, the Court engaged in a perfunctory statutory analysis to determine that the HEROES Act’s provision allowing the Secretary to “waive or modify” provisions of the federal student loan system fell short of granting him the authority to cancel debt. Here, too, Justice Kagan’s dissent walks through the ways in which the conservative majority selectively interpreted the Act. In essence, the majority found that “however broad the meaning of ‘waive or modify,’ that language cannot authorize the kind of exhaustive rewriting of the statute that has taken place here.” Justice Roberts suggests that such authority would be limitless, and therefore lawless.
But this is both contrary to the statute itself and to Congress’s intent when it was passed. The HEROES Act narrowly cabins the Secretary’s authority by limiting it to the waiver or modification of provisions of law as may be necessary to help affected borrowers during a national emergency. Each of these elements narrowly tailors any relief to the scope of the problem to which it is responsive, and served as guardrails for the President’s debt relief plan. This was also Congress’s delegation of authority: to make sure the Secretary could do essentially whatever is needed in specific circumstances. It could have enumerated cancellation as one authority, but it didn’t, because it didn’t enumerate every possible outcome from the Secretary’s potential future actions. That does not mean cancellation was outside the Secretary’s authority under the Act.
Although this case was putatively decided on the basis of statutory interpretation, the majority, and Justice Barrett in greater detail in her concurrence, discussed the major questions doctrine, and framed their analysis as protecting Congress’s sole authority to decide whether cancellation is appropriate in this instance. Ironically—or perhaps, hypocritically—in doing so, the Court supplants its own policy preferences in lieu of the broad delegation to the Secretary that Congress has already made, thereby disrupting the very Separation of Powers balance that it purports to protect. By requiring hyper-specific legislation in the name of protecting Congress’s exclusive right to legislate, the Court effectively voids the broad authority that Congress has already intentionally conferred.
Critically, cancellation is not an entirely new concept, as there are several programs that currently offer borrowers relief such as Public Service Loan Forgiveness, Income-Driven Repayment plans, and most recently the Income-Driven Repayment Account Adjustment program that relieved over 800,000 borrowers of their loans after being in repayment for decades. The HEROES Act’s authority to waive or modify provisions of the federal student loan system must be read in the context of debt cancellation as a routine part of that system. It is not up to the Court to tell Congress how the law should have been written, it is up to the Court to only faithfully interpret what Congress has already legislated. The Court overstepped its authority when it determined that Congress could not possibly have meant to confer the text’s clear authority.
Many of the conservative justices identify as textualists. Their legal inquiry should begin with the text of the statute at issue, and if sufficient authority is found there, that’s where the inquiry should end, too. Here, the majority went beyond the plain meaning of the HEROES Act; they didn’t like the authority it conveyed, so they decided Congress couldn’t have meant to convey that authority. This isn’t a story of reasonable minds disagreeing; rather, a conservative majority predetermined the outcome that it wanted to reach, and reverse-engineered a path to getting there, bypassing legal norms in the process. The country deserves a more reasoned process from its highest court, but until meaningful accountability mechanisms are in place, we can expect more decisions like this.
Borrowers should demand that the Biden Administration keep its promise and move quickly.
The Court’s decision in Nebraska does not foreclose debt relief for millions of borrowers: it only denies the Secretary’s authority to provide relief under the HEROES Act. It does not prevent the Secretary from taking other legal avenues to provide borrowers with much-needed relief. The Secretary has additional authority to cancel debt under the Higher Education Act of 1965 (HEA). The Biden Administration announced a few hours after the court decision was released that it would use this HEA authority to continue to pursue cancellation for borrowers. This process, which is currently underway, may take several months until a final plan is announced. Borrowers should keep close attention on the Biden Administration as it proceeds with this process and take every opportunity to remind the Administration of its commitment to cancel student debt. Advocates are working hard to make sure that borrowers see relief as soon as possible.
The student loan borrowers impacted by this decision should also know that all hope is not lost with one unconscionable ruling by a rogue Court. The decision in Nebraska does not affect any of the various other loan cancellation programs, which range from cancellation for public service workers to students whose schools defrauded them to borrowers who have been in repayment for 20 or more years. Borrowers should prepare for repayment to begin this fall by contacting their servicers to take advantage of the repayment programs offered for lower payments.
Khandice Lofton is Counsel at the Student Borrower Protection Center.
Winston Berkman-Breen is the Legal Director at the Student Borrower Protection Center.