Will the Supreme Court Let Biden Cancel Student Debt

The justices are to rule on a program that seeks to wipe out billions of dollars of loans affecting some 40 million Americans.
Thursday, March 2nd, 2023
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Syndney Harper
This is Sydney Harper, “Daily” producer. I’m here outside the Supreme Court in DC. It’s Tuesday morning. And I’m looking at a protest of a bunch of people who are here in favor of the student loan debt cancellation program.

Speaker 2
Again, SCOTUS, can you hear us?

Crowd
SCOTUS, can you hear us?

Speaker 2
Debt relief is legal.

Crowd
Debt relief is legal.

Sabrina Tavernise
From “The New York Times,” I’m Sabrina Tavernise. And this is “The Daily.” This week, the Supreme Court heard arguments in a case against President Biden’s student loan cancellation program. That program would wipe out an astonishing $400 billion in student debt. The case seeks to reverse that.

Syndney Harper
Hey, y’all. I’m just curious about people’s student debt. And I’m just trying to hear some numbers from people about what they owe.

Speaker 3
Oh, some numbers.

Syndney Harper
Some numbers.

Speaker 3
$25,000, yeah.

Speaker 4
I think I have about 40k.

Speaker 3
Ooh.

Speaker 4
For student loan debt?

Speaker 3
Yeah.

Speaker 5
Yeah.

Speaker 6
How much?

Syndney Harper
Yeah.

Speaker 6
Approximately $130,000 in student loans.

Syndney Harper
Your mouth is open right now.

Speaker 7
That’s a lot.

Speaker 8
That is a lot.

Syndney Harper
What do you owe in loans?

Speaker 9
Oh, $36,000. But I say $35,000 to make myself feel better.

Syndney Harper
And does it make you feel better?

Speaker 9
No.

Speaker 10
I just crossed six figures this year. So it’s extremely worrying that I’m not going to be able to build that generational wealth for my children and my children’s children so that way they don’t have to take out loans in college. So I just worry about the future of my family and generations to come if I’m unable to get out of this debt myself.

Sabrina Tavernise
Today my colleague, Adam Liptak, on how the Court might rule and what that will mean for more than 40 million Americans.

It’s Thursday, March 2.

So, Adam, tell us about the case the Supreme Court heard on Tuesday.

Adam Liptak
The Supreme Court is considering whether President Biden can embark on one of the most ambitious and expensive executive actions ever. It’s a big case on a practical level, but it’s also a big case on a legal and constitutional structure level, asking when the president is authorized to take such a big step and what Congress had to do to give him that authority.

Sabrina Tavernise
Remind us how we got here.

Adam Liptak
Well, this, like so much of the life we lead these days, has its roots in the pandemic. And when the pandemic started in March of 2020, President Trump and his education secretary, Betsy DeVos, decided that the pandemic warranted emergency action and that they would pause repayment obligations for everyone who has federal student loans and also interest accrual. And he relies on a 2003 law, the Higher Education Relief Opportunities for Students Act — people call it the HEROES Act — initially passed after the September 11 attacks, says this, that the Education Secretary can waive or modify any statutory or regulatory provision to borrowers affected by a war or other military operation or national emergency. And that phrase, “national emergency,” does all the work. And it allows President Trump and his Education Secretary, Betsy DeVos, to pause loan repayments and interest accrual.

Sabrina Tavernise
OK, so that’s Trump easing the financial burden on millions of students. Then Biden comes in. What does he do?

Adam Liptak
Initially President Biden continues the loan pause. It continues to cost the government lots and lots of money. But there comes a time when he sees that the pandemic is going to end.

And back in August, he decides that the repayment pause would end and that instead he would forgive a great deal of the debt. Relying on the HEROES Act, he would forgive $10,000 for people making $125,000 or less or $20,000 for people who’d received Pell grants for poorer students in college. And this was in the face of some doubt on the scope of his authority, on whether he had the power to make this enormous move of forgiving more than $400 billion of debt.

Sabrina Tavernise
Yeah, that kind of action is, obviously, a step further than what both Trump and Biden have been doing to that point. So what’s the response?

Adam Liptak
The response among Democrats, and particularly among young Democrats, was enormously enthusiastic. And it also engendered a kind of fury on the right, who didn’t think the president has this power, who call him King Biden, and who promptly went to court all around the country, but most notably in a case brought by six Republican-led states to say the president was not authorized to do this and that the HEROES Act did not give him the power to forgive all this debt.

Sabrina Tavernise
Right, and all of that leads us to Tuesday with the arguments in this case before the Supreme Court. So what happened in the court? What did the administration say?

Adam Liptak
Well, I should mention that there were actually two cases about the Biden plan before the court. One was brought by two borrowers. But I think that case was minor and not likely to succeed.

Then there’s the second one, the main one, which was brought by six states. It was mainly on behalf of an agency in Missouri, which they claim was damaged by the Biden plan. And in that second case, again, the basic question was whether the coronavirus pandemic justified under this HEROES Act of 2003 the wholesale cancellation of hundreds of billions of dollars in student debt.

Archived Recording 1
You’ll hear argument first this morning in Case 22-506, Biden versus Nebraska.

Adam Liptak
The Biden administration, represented by the Solicitor General, Elizabeth Prelogar, makes a couple of basic points.

Archived Recording (Elizabeth Prelogar)
Mr. Chief Justice and may it please the court, COVID-19 is the most devastating pandemic in our nation’s history. And it has caused enormous disruption and economic distress.

Adam Liptak
One is to remind the justices of what a devastating economic impact COVID had, particularly on people with student debt.

Archived Recording (Elizabeth Prelogar)
Over the past three years, millions of Americans have struggled to pay rent, utilities, food. And many have been unable to pay their debts.

Adam Liptak
And to say it would cause a devastating blow to people and cause many of them to default if they were made to repay the sums that the administration wants to forgive.

Archived Recording (Elizabeth Prelogar)
But if that forbearance ends without further relief, it’s undisputed that defaults and delinquencies will surge above prepandemic levels.

Adam Liptak
And then she went on to make the legal point —

Archived Recording (Elizabeth Prelogar)
Two secretaries across two administrations invoked the HEROES Act to suspend interest and payment obligations for all Americans with federal —

Adam Liptak
— that the HEROES Act, she says, completely and comfortably authorizes the Secretary of Education to waive or modify any statutory or regulatory provision, which she says encompasses student debt.

Sabrina Tavernise
And how did the justices respond to that argument?

Adam Liptak
Well, the more conservative justices were not at all persuaded.

Archived Recording (John Roberts)
You’re arguing here that the president can act unilaterally, that there was no role for Congress to play in this either.

Adam Liptak
And Chief Justice Roberts in particular, right out of the gate, says that if you’re going to spend these kinds of sums of money, you need particularly clear congressional authorization. And he didn’t see it.

Archived Recording (John Roberts)
Now, we take very seriously the idea of separation of powers and that power should be divided to prevent its abuse.

Adam Liptak
He thought that the separation of powers doesn’t allow the executive to act on its own. And he invoked a concept the Court calls the major questions doctrine.

Archived Recording (John Roberts)
You would recognize at least that this is a case that presents extraordinarily serious important issues about the role of Congress and about the role that we should exercise in scrutinizing that, significant enough that the major questions doctrine ought to be considered, implicated.

Archived Recording (Elizabeth Prelogar)
Well, Mr. Chief —

Sabrina Tavernise
And, Adam, what is the major questions doctrine?

Adam Liptak
It’s a judicially created doctrine that says the bigger a deal is, the bigger the political stakes are, the bigger the economic stakes are, the more Congress has to speak clearly, that even if you have some statutory language that may authorize you to do something minor, if it’s a big enough deal, and the Chief Justice says half a trillion dollars is certainly a big enough deal, Congress has to speak exceptionally clearly. Congress has to give really clear authority to the president to do what he wants to do if the question is major.

Sabrina Tavernise
Right. But there is something that the conservatives are saying here that’s true, which is there’s a lot of money involved here, right? So it does in a way feel like $400 billion would qualify as major.

Adam Liptak
Right. And even Justice Sonia Sotomayor, a liberal says, well, on that she doesn’t disagree, that the sums of money involved are major. And I think probably the ordinary American, as a matter of common sense, would at least want to know that Congress has blessed this idea. So even if you have consensus that it’s a lot of money, and most people would say, given the sums of money involved, you want Congress to have blessed it, that just takes you back to the HEROES Act and in particular to the question of what does waive or modify mean?

Archived Recording (Clarence Thomas)
General, is this a waiver or is it a modification?

Archived Recording (Elizabeth Prelogar)
It’s both a waiver and a modification, Justice Thomas. This appears —

Adam Liptak
A couple of the justices, Chief Justice Roberts and Justice Clarence Thomas, seem pretty clear that they didn’t think “waive” or “modify” meant cancel —

Archived Recording (John Roberts)
We’re talking about half a trillion dollars. How does that fit under the normal understanding of modifying?

Adam Liptak
— that that was something different.

Archived Recording (Clarence Thomas)
Well, would you take a minute to explain how a waiver or modification amounts to a waiver?

Adam Liptak
So you see that even on the Court, people are struggling with just how far you can take those words from 2003, “waive or modify.”

Sabrina Tavernise
And how did the Biden administration respond to that skepticism about the language?

Adam Liptak
It said the language plainly covers exactly what happened here. It talks about responding to an emergency.

Archived Recording (Elizabeth Prelogar)
Congress already made the judgment that in the context of a national emergency, you should be able to —

Adam Liptak
She said Congress anticipated that it would be giving the Secretary of Education power in an emergency to be nimble and aggressive.

Archived Recording (Elizabeth Prelogar)
So there’s not the same mismatch here of taking an old statute and dusting it off and deploying it in a context where Congress could never have imagined it would be used before. Instead, this is a perfect fit with the problem that the Secretary confronted.

Adam Liptak
So she seemed quite comfortable and confident that the statute gave them the power they invoked.

Sabrina Tavernise
And were the justices convinced by that, that the Biden administration actually had the full power to do it under the statute?

Adam Liptak
The right side of the court, the six justice conservative majority did not seem persuaded by these arguments. And some of them also talked about not buying it as a matter of fundamental fairness.

Archived Recording (Neil Gorsuch)
What I think they argue that is missing is cost to other persons in terms of fairness, for example.

Adam Liptak
So you had Justice Neil Gorsuch talking about what about people who’ve paid off their loans?

Archived Recording (Neil Gorsuch)
People who don’t — have planned their lives around not seeking loans and people who are not eligible for loans in the first place and that a half a trillion dollars is being diverted to one group of favored persons over others.

Adam Liptak
And he said half a trillion dollars are being diverted to one group instead of another.

Archived Recording (Neil Gorsuch)
I didn’t see anything in the memorandum that dealt with those kinds of questions. And if there is something, I’d be appreciative if you could point me to it.

Sabrina Tavernise
So at this point, we’ve really gone beyond the issue of separation of powers, it sounds like. Really the conservatives are taking issue with the program itself.

Adam Liptak
They’re really doubtful about the wisdom and fairness of the program. Chief Justice Roberts proposes a distinction, says some people take out loans and go to college and they do very well in life. And we’re going to forgive those loans.

Some people start small businesses. Some people start a lawn care business and take out loans. We’re not going to forgive those loans, even though those people typically might do less well than people with college degrees.

And then he makes a characteristically smart pivot and says, “But, of course, my views of fairness don’t count. Your views of fairness don’t count. But where there are questions of fairness in play, that is typically a question for Congress.”

He says, “Congress decides how to spend taxpayers’ money. If there are questions of fairness involved, maybe Congress should have acted.” But the bottom line, Sabrina, is that the conservative justices were not buying what the Biden administration was selling.

[MUSIC PLAYING]

Sabrina Tavernise
We’ll be right back.

Adam, what did the state’s lawyer argue, I mean, the side that was suing the Biden administration?

Adam Liptak
James Campbell, Nebraska’s Solicitor General, arguing for these six Republican-led states, makes a couple of basic points. First, he said whatever the Trump administration did in the heat of the pandemic to pause loan repayment for a relatively brief period of time maybe fits within the HEROES Act, may be said to be a modification.

Archived Recording (James Campbell)
I think, arguably, that was a legitimate use of the HEROES Act because taking a congressionally created six-month program and extending it for three months seems like it might be a modification. But now —

Adam Liptak
But now with the pandemic receding and the completely different tack, he says, that the Biden administration is taking not in pausing but forgiving entirely huge sums of money he says is clearly not authorized by the HEROES Act.

Archived Recording (James Campbell)
But now that we’re two years down the road, we’re beyond the modification. And not only that, the connection to the national emergency has become even more tenuous.

Sabrina Tavernise
And how do the liberal justices respond to this argument?

Adam Liptak
I got to say, Sabrina, they seemed a little incredulous.

Archived Recording (Elena Kagan)
Congress could not have made this much more clear. I mean, Congress didn’t say exactly the circumstances in which it wanted the secretary to use this authority, of course not. This is a bill about what happens when you have an emergency.

Adam Liptak
Justice Elena Kagan, for instance, says that Congress could hardly have been clearer. Congress said the secretary could act where there was an emergency. Nobody doubts that this was an emergency. That’s what happens when you give people emergency power. And she has a back and forth with Mr. Campbell about a hypothetical.

Archived Recording (Elena Kagan)
So let me give you an example. Suppose there’s an earthquake. We’ll use an earthquake instead of a pandemic.

Adam Liptak
What if it’s an earthquake? What if it’s an earthquake instead of a pandemic? Can the secretary allow loan forgiveness in that circumstance?

Archived Recording (Elena Kagan)
Could the secretary say, well, there was this terrible earthquake in lots of people’s houses were destroyed. And I’m going to discharge the loans of people whose houses were destroyed in this terrible earthquake.

Adam Liptak
And Campbell says, no, that’s not a waiver or modification.

Archived Recording (James Campbell)
Your honor, it sounds to me like creating a new program. I don’t think that that would be OK under the HEROES Act.

Adam Liptak
Kagan responds, but this is very broad language. You can modify your waive any statutory or regulatory provision.

Archived Recording (Elena Kagan)
This is an emergency provision. There’s an emergency. It’s an earthquake. You don’t think Congress wanted to give — and not just wanted. It’s not what Congress thought. It’s what Congress said, to give the secretary power to say, oh my gosh, people have had their homes wiped out. We’re going to discharge their student loans.

Adam Liptak
And Campbell says no —

Archived Recording (James Campbell)
Your honor, when it comes to taking that ultimate step to discharging loans, Congress wanted to preserve that for itself.

Adam Liptak
— that the HEROES Act may allow some minor modifications but not the wholesale forgiveness of student loans.

Sabrina Tavernise
And how is Kagan during this exchange?

Adam Liptak
She’s increasingly exasperated. And she turns to what the liberals may think is their only real hope of prevailing in this case. And that’s a question the Court has to answer before it reaches whether the Biden administration had acted lawfully. And that’s whether anyone has suffered the sort of harm that gives them standing to sue.

Sabrina Tavernise
Adam, remind me, what do you mean by standing?

Adam Liptak
Well, the Constitution says the federal courts can only decide actual cases or controversies. And that’s understood to mean that you have to have a stake in the case. You can’t just be interested in Supreme Court, tell me, I’m not happy about what the Biden administration has done here. And I’d like you to give me your opinion. You have to have been hurt. And the result of the decision has to help you.

Sabrina Tavernise
So, in other words, you have to be a party in the case, someone injured in the case.

Adam Liptak
Right. And in this case, there were serious questions about whether any of the plaintiffs had standing to sue. The states mainly claim to be bringing their suit on behalf of this semi-independent Missouri entity, the Missouri Higher Education Loan Authority, which everyone calls MOHELA, which they claimed would be hurt financially because of Biden’s move.

Archived Recording (Elena Kagan)
MOHELA isn’t here, General Crawford. Is that correct?

Archived Recording 2
MOHELA is not here. But its interests are here.

Archived Recording (Elena Kagan)
It has the ability to sue and be sued. It’s been set up as an independent corporate entity with the ability to bring suits on its own.

Adam Liptak
And the Solicitor General said, yes, that entity might have standing. But that entity was not before the Court. And the liberal justices, and Justice Kagan in particular, said, listen, it’s an independent corporation. It has chosen not to sue.

Archived Recording (Elena Kagan)
Usually we don’t allow one person to step into another’s shoes and say, I think that that person suffered a harm, even if the harm is very great. We leave it to the person, him or her or itself, to make that judgment. Now, here —

Adam Liptak
And she says, we don’t think that a state should be able to step into the shoes of an injured party and say that its harm translates into the state’s harm and gives it standing to sue.

Archived Recording (Elena Kagan)
I guess, I mean, there are third parties all the time who have an interest in, gosh, I wish that party over there would bring a suit because I have some relationship with that third party and I would like it very much if that third party represented its own interests better, in my view. But we don’t do that. We don’t allow that kind of interference with the decision of the entity involved to decide whether the harm is of the kind that they want to sue for.

Adam Liptak
And the bottom line of all of these arguments and complications is that there are serious questions about whether anyone has standing to sue. And that might be the best argument for the liberals and for the Biden administration, given how hostile the conservative majority was to their basic claim that they have the right to cancel these loans under the HEROES Act.

Sabrina Tavernise
Right. And from what you’ve said, it doesn’t really seem like the conservative majority would be that receptive to dismissing the case based on standing.

Adam Liptak
They basically did not engage on standing. So I suppose there’s a remote possibility that the Biden administration pulls out a win on that ground, although it doesn’t seem likely. It seems like this will be yet another case in which the Court breaks along predictable lines, with the six Republican appointees in the majority.

Sabrina Tavernise
Another six to three.

Adam Liptak
That’s right.

Sabrina Tavernise
So in a way, this seems to be just another case that will be decided on predictable partisan lines within the court. But to go back to the beginning of our conversation, Adam, the Biden administration wasn’t necessarily on sturdy legal footing to begin with, right? I mean, it was a bit of a stretch legally.

And they knew it would be controversial. And they knew there would be court challenges. And yet they pushed it through right before an election anyway.

Adam Liptak
Right. So think about the politics of it for a second. It was surely good politics for the Democrats in the midterms to have made this promise. And I’m not sure it’s bad politics for the Democrats to lose before a hostile Supreme Court.

Politically they could say to their base, we did what we could. We’re stuck with a court that routinely pushes back against our progressive initiatives. And we’re fighting as hard as we can.

[MUSIC PLAYING]

Sabrina Tavernise
Adam, stepping back here, what does it mean for the tens of millions of Americans who actually hold this debt?

Adam Liptak
So we’ll get a decision probably at the end of June that will be full of legal concepts about standing and major questions doctrine and HEROES Act and presidential authority and separation of powers. And I don’t think the borrowers are going to read the decision. They’re just going to look at the bottom line.

And what that bottom line seems to be is that they will feel robbed, in a sense. They will feel that they had been promised by the Biden administration significant, sometimes life-altering debt relief coming out of the pandemic. And it might feel a little ugly to them. It will represent a missed opportunity and dashed hopes.

Sabrina Tavernise
Adam, thank you.

Adam Liptak
Thank you, Sabrina.

Sabrina Tavernise
We’ll be right back.

[MUSIC PLAYING] Here’s what else you should know today.

[ROWDY SHOUTING]

[GRENADE FIRING]

On Wednesday, Israeli police used stun grenades and water cannons against thousands of protesters in Tel Aviv, a significant escalation in the confrontation between Israel’s new government, the most right wing in the country’s history, and its critics. Protests have been disrupting life in Israeli cities for eight weeks over the new government’s push to make changes to the country’s Supreme Court. Opponents say the changes threaten to turn Israel into an autocracy. Several dozen protesters were arrested and a number were injured.

Today’s episode was produced by Rikki Novetsky, Sydney Harper, and Jessica Cheung. It was edited by Marc Georges, Michael Benoist, and Lexie Diao, contains original music by Marion Lozano and Diane Wong and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for “The Daily.” I’m Sabrina Tavernise. See you tomorrow.