Could the Courts Block Biden’s Student Loan Relief Plan?

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Last week, President Biden announced a plan to wipe out up to $20,000 of student loan debt for tens of millions of low- and middle-income Americans, in a striking about-face for a president who just last year doubted whether he had the unilateral authority to cancel student loan debt on such a broad basis.

Biden was not the only powerful member of his party to dismiss the idea as unworkable: “People think the president of the United States has the power for debt forgiveness,” House Speaker Nancy Pelosi said in July 2021. “He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”

Now opponents of mass cancellation — including state attorneys general — are aiming to press that argument in court. What is the legal case against the White House’s authority to cancel student debt, and could the Supreme Court find it sufficiently persuasive to reverse the Biden administration’s debt jubilee? Here’s what people are saying.

The power of cancellation

The Biden administration claims that its authority to wipe out hundreds of billions of dollars in federal student loan debt derives from a 2003 law called the Heroes Act. Enacted during the Iraq and Afghanistan wars, the law gives the secretary of Education the power to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” during a national emergency if, among other reasons, the secretary believes that doing so is necessary to ensure that borrowers are “not placed in a worse position financially” because of that emergency.

Citing the national emergency that was declared for Covid-19 in March 2020, the Trump administration invoked the Heroes Act to extend a pause on student loan payments and interest accrual through the end of January 2021, which the Biden administration further extended through the end of 2022. Biden has also used the law to forgive smaller amounts of debt for more targeted demographics, including permanently disabled people, people who were defrauded by failed for-profit schools and soldiers deployed to war zones.

But never before has the government canceled this much student debt for this many people. After the 2020 presidential election, the Trump administration attempted to pre-empt the use of the Heroes Act for this purpose, issuing a memo claiming that “Congress never intended the Heroes Act as authority for mass cancellation, compromise, discharge or forgiveness of student loan principal balances.”

In its own memo last week, however, the Biden administration argued that the Trump administration’s conclusions were “unsupported and incorrect.” The Justice Department’s Office of Legal Counsel, which provides legal advice to the executive branch, concurred in a separate opinion, concluding that “reducing or canceling the principal balances of student loans, including for a broad class of borrowers who the secretary determines suffered financial harm because of Covid-19, could be a permissible response to the Covid-19 pandemic.”

The case against mass cancellation

Many legal analysts believe that the Supreme Court’s right-wing majority is likely to view the Biden administration’s debt cancellation with skepticism and would be willing to hear a case against it. While the text of the Heroes Act does grant the Department of Education broad authority over federal student loans, mass cancellation may run afoul of what’s known as the “major questions doctrine,” which holds that executive agencies need explicit authorization from Congress for any actions of vast economic or political significance.

While the major questions doctrine was rarely mentioned in federal courts before 2018, according to a Bloomberg Law analysis, the Supreme Court has invoked it more frequently and more aggressively in recent years, as when it rejected the authority of the Centers for Disease Control and Prevention to ban evictions in 2021 and limited the Environmental Protection Agency’s ability to regulate carbon emissions from power plants in 2022.

“That’s a very powerful and controversial tool that the Supreme Court has used to narrow the scope of administrative agency authority,” Daniel Rodriguez, a law professor at Northwestern University, told Bloomberg. “Will the court accept this delegated authority to the Department of Education to forgive student loans in the absence of a specific statute?”

Jed Shugerman, a Fordham Law School professor, doesn’t think so. Although he supports some form of student debt relief, he believes the administration made a tactical mistake by tying it to the pandemic-related state of emergency.

The better strategy, in Shugerman’s view, would have been to invoke the Higher Education Act of 1965, which also grants sweeping authority over student loans to the Department of Education. “There is a very broad, nonemergency-based provision that allows the Department of Education to waive debt,” he said. “It’s puzzling why the Biden administration wanted to invoke Covid as a stretch of the 9/11 act when they had an actual basis from the Higher Education Act.”

Yet other legal scholars maintain that the Biden administration is on solid legal ground, given that its earlier use of the Heroes Act to forgive billions of dollars in student loan debt for more targeted demographics went unchallenged. “We’re talking about degree, not an actual change in kind,” said Frederick Lawrence, a distinguished lecturer at Georgetown Law. “I would understand a major question to be something that is totally different from anything that’s been done before or that the legislation has provided for. So I think the administration set the better part of the argument here.”

What to watch

Before the Biden administration has to prepare to defend itself in court, opponents of debt cancellation will have to settle the question of who has standing to sue.

According to a recent Virginia Law Review article, the answer might be no one. To have standing, a party would have to prove that mass cancellation harmed them in a direct, concrete way and show how blocking cancellation would redress that harm. The article lays out five classes of potential litigants, all of which, it argues, would encounter jurisprudential obstacles:

  • A group of taxpayers might challenge cancellation on grounds that the government is being financially irresponsible, but the Supreme Court has in the past rejected taxpayer standing to sue in most cases. As Justice Samuel Alito wrote in 2007, “Generally, a federal taxpayer’s interest in seeing that Treasury funds are spent in accordance with the Constitution is too attenuated to give rise to the kind of redressable ‘personal injury.’”

  • Former borrowers who fully paid off their loans could argue that mass cancellation is unfair to them, but blocking cancellation would not remedy the harm they suffered of needing to pay off their debt; it would only prevent current borrowers from receiving a benefit.

  • Congress, if it were so inclined, could mount a case that the Department of Education exceeded the powers afforded to it by the Heroes Act, but, the article argues, “a federal court would likely determine that Congress’s interest in a particular interpretation of a federal statute is no greater than that of the general population.”

  • State governments, likewise, may argue that their sovereignty was infringed, but would find it difficult to prove a concrete injury, as their budgets aren’t directly affected by federal loan forgiveness.

  • Finally, the loan servicers that the federal government pays to manage debt repayment could claim that mass cancellation harms their business, but courts have generally found that contractors do not have standing to challenge changes in federal policy just because those changes may affect their bottom lines.

Still, some legal analysts are less bearish about the chances of a legitimate challenge to mass cancellation. The top lawyer for the Department of Education during Barack Obama’s presidency wrote last year in a private memo, obtained by The Wall Street Journal, that loan servicers and investors that own securities backed by student loans might indeed have standing to sue. And if Republicans retake control of the House of Representatives in November, they may find inspiration from the successful lawsuit the former Speaker of the House John Boehner filed in 2014 against the Obama administration over the Affordable Care Act.

“If it hasn’t been struck down by then, I think there’s no doubt that a Speaker Kevin McCarthy would bring a suit on the House Republicans’ behalf,” said Lanae Erikson, senior vice president for social policy, education and politics at the think tank Third Way.

Ultimately, whether the Supreme Court decides to hear such a case will hinge less on precedent or principle than on the personal preferences of the majority, Mark Joseph Stern of Slate argues. “The Biden administration should proceed on the assumption that the conservative jurists, and ultimately the justices themselves, will be eager to shred the new program, and will therefore find that somebody, somewhere, has standing,” he wrote. “It should also consider its response when a Trump judge inevitably issues a nationwide injunction against debt cancellation and the Supreme Court’s conservatives uphold it.”

Do you have a point of view we missed? Email us at [email protected]. Please note your name, age and location in your response, which may be included in the next newsletter.


“Biden’s Tuition Gambit Could (And Should) End Up in Court” [Politico]

“Republicans Search for Someone Who Can Sue Over Biden’s Student Loan Debt Plan” [Time]

“Nancy Pelosi Should Hold Biden Accountable for His ‘Unconstitutional and Illegal’ Student-Loan Forgiveness, 94 G.O.P. Lawmakers Say” [Insider]

“Can Anyone Sue Over Biden’s Student-Loan Lawlessness?” [National Review]

“What the Critics of Loan Forgiveness Are Forgetting” [Slate]

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