Does Federal Student Loan Relief Stand a Chance?

Laura Bart is a 1L at Washington College of Law. She graduated from Bucknell University in 2019 and worked in the U.S. House of Representatives for 3 years before coming to law school, focusing on education and nutrition policy. She hopes to merge her policy background with her legal studies to further her interest in education law.

Despite public health milestones, the lasting economic effects of COVID-19 remain present in the lives of many. This includes federal student loan borrowers whose future hangs in the balance of the Supreme Court’s upcoming decisions in Biden v. Nebraska and Brown v. Department of Education. [[1]]

In August 2022, the Biden Administration announced that it would invoke its authority under the HEROES Act of 2003 to cancel up to $20,000 in federal student loan debt.[[2]] The statute, originally enacted in response to the September 11 terrorist attacks, authorizes the Secretary to waive or modify any statutory provision applicable to student financial assistance programs. [[3]]

In terms of congressional intent, the post-national-emergency context of the legislation would seem to align with giving broad discretion to the Secretary to protect student loan recipients after periods of national uncertainty, and the terms “waive or modify” could be understood to encompass the forgiveness aspect. Though if that argument were to succeed, it could open up room for criticism based on doubts about how much of a post-national-emergency context the country is currently in given the amount of time that has passed since the peak of the COVID-19 pandemic.

The Administration argues that the statutory language expressly authorizes the deduction of borrowers’ repayment obligations. [[4]] Meanwhile, both plaintiffs claim that the language is not specific enough to justify a program with such major economic and political significance. [[5]]

The legal threats to the Biden Administration’s student debt relief plan present procedural issues in addition to potential limits on executive authority, as the Court must decide the issue of standing before considering the substance of the arguments. Both the state and individual plaintiffs face procedural challenges in proving that they have suffered an injury traceable to the defendant’s conduct that is likely to be redressed by the remedy sought. [[7]]

In the appellate arguments, Missouri argued student debt cancellation would injure them by the impact it would have on the Higher Education Loan Authority of the State of Missouri (MOHELA), an entity created by the legislature which acts as a servicer of federal student loans. [[8]] During the oral arguments heard in February, Justices from both sides critiqued this argument; questioning why MOHELA chose not to bring the litigation themselves and pointing out that Missouri was so disconnected from this entity that the State had to file an open-records request just to get the records it needed for the lawsuit. [[9]] Nevertheless, despite what may appear as a lack of standing, it is possible that the Court will look past procedural issues to take the opportunity to address the substance of the lawsuit.

Despite an uphill procedural battle, predictions seem doubtful that the nearly 50 million borrowers who benefit from this program will succeed in having any amount of their debt reduced.[[10]] Outside of the HEROES Act, the Administration could look to the Higher Education Act of 1965 to provide relief to a narrower group of borrowers, such as teachers, those with a permanent disability, or those who could not complete an educational program because their institution closed. However, any plan B would inevitably mean narrowing the program in one way or another and decreasing the number of borrowers who would benefit from what one of the most historic actions toward student debt relief.

[[1]] See generally Elizabeth B. Wydra et al., Biden v. Nebraska & Dep’t of Educ. v. Brown, Constitutional Accountability Ctr. (last visited Mar. 27, 2023), https://www.theusconstitution.org/litigation/biden-v-nebraska/ (giving a brief overview of the timeline and background of the two cases in which the Supreme Court is considering whether to allow the Biden Administration’s student debt relief plan to go into effect).

[[2]] Edward C. Liu & Sean M. Stiff, Cong. Rsch. Serv., LSB10876, Student Loan Cancellation Reaches the Supreme Court (2022).

[[3]] See Higher Education Relief Opportunities for Students Act of 2003, H.R. 1412, 108^th Cong. § 2(a) (2003).

[[4]] See Edward C. Liu & Sean M. Stiff, Cong. Rsch. Serv., LSB10818, Statutory Basis for Biden Administration Student Loan Forgiveness (2022) (explaining the Administration’s argument in support of their authority to cancel federal student loans under the HEROES Act).

[[5]] See Liu & Stiff, supra note 2, at 3 (explaining the Plaintiffs’ use of the major questions doctrine to argue that the HEORES act does not expressly authorize the Administration’s actions).

[[6]] See Brown v. Dep’t of Educ., F. Supp. 3d 1, 23 (N.D. Tex. 2022); Nebraska v. Biden, F. Supp. 3d 1, 5 (E.D. Mo. 2022).

[[7]] See generally Liu & Stiff, supra note 2, at 3-4 (explaining that Missouri’s standing argument that their injury arises from the impact of loan cancellation on MOHELA was initially dismissed by the district court).

[[8]] Id.

[[9]] See Transcript of Oral Argument at 26, Biden v. Nebraska, U.S. (2023) No. 22-506 (Barrett, J. questioning why Missouri didn’t “just strong-arm MOHELA and say you’ve got to pursue this suit”).

[[10]] Greg Iacurci, Who Benefits Most from Student Loan Forgiveness? Economists, Investment Banks and Education Experts Weigh In, CNBC (Sept. 11, 2022),  https://www.cnbc.com/2022/09/11/heres-who-benefits-most-from-student-loan-forgiveness.html (quoting remarks from President Biden stating that 95% of borrowers, or 43 million people would benefit from the debt relief plan and nearly 45% of borrowers or almost 20 million people would have their debt fully canceled).

[[11]] See Edward C. Liu & Sean M. Stiff, Cong. Rsch. Serv., LSB10818, Statutory Basis for Biden Administration Student Loan Forgiveness (2022), at 2 (explaining various statutory authorities for providing student loan debt relief).