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Much More Than Student Loans at Stake in Lawsuit

The Biden loan-forgiveness case coming before the U.S. Supreme Court this month could have implications for federalism and executive power.
February 7, 2023
Much More Than Student Loans at Stake in Lawsuit
Student loan borrowers gathered at the Supreme Court today to tell the court that student loan relief is legal on January 02, 2023 in Washington, DC. (Photo by Larry French/Getty Images for We, The 45 Million)

On February 28, the Supreme Court will hear oral argument in Biden v. Nebraska, a case involving six states—Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina—and two individual borrowers who separately sued the Department of Education to halt its student-debt relief plan. Although the plan was initiated by former President Trump in response to the COVID-19 pandemic, the Biden administration expanded it to not just delay loan repayments, but also to cancel up to $20,000 in debt for some borrowers. The justices rejected the federal government’s requests to temporarily reinstate the program during the litigation, instead fast-tracking the two cases, which meant skipping over the immediate appellate court in one of them.

The consolidated case is important not just because more than 43 million people have outstanding loans under the federal government programs implicated, with debts totaling more than $1.6 trillion. And its importance goes beyond the merits of whether Secretary of Education Miguel Cardona overstepped his agency’s legal authority in canceling a subset of student loans. Lurking in the lawsuit are two important conflicts: one between the states and the federal government, the other among Congress, the president and the Supreme Court. Each of these is a tug-of-war over constitutional power—and each may prove enormously consequential.

Keep in mind that neither the Trump nor the Biden administration took action on student debt in a legal vacuum. Both were operating under the Higher Education Relief Opportunities for Students Act (“HEROES Act”), a statute originally enacted four months after the 9/11 terrorist attacks in order “to provide the Secretary of Education with specific waiver authority to respond to conditions in the national emergency.” Congress expanded that authority in 2003, specifically authorizing the education secretary to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” available under another law called the Education Act, to the extent “the Secretary deems necessary in connection with a war or other military operation or national emergency.”

Translation: Congress gave the Department of Education the power to “waive or modify” federal student debt programs to the extent it “deems necessary” in response to a “national emergency.” President Trump declared the COVID-19 pandemic a national emergency in March 2020, a declaration that remains in effect to this day. The same month, Education Secretary Betsy DeVos used the HEROES Act to pause repayment obligations and suspend the accrual of interest on loans held by the federal government. At the end of March 2020, Congress passed the COVID-19 Pandemic Education Relief Act of 2020, directing DeVos to extend her plan through September 2020. Both administrations then continued the pause beyond that date. (The Biden administration announced a plan to end the declaration of a COVID-19 national emergency on May 11 of this year.)

Then, in August 2022, Secretary Cardona extended the pause through December 31, 2022, but also directed the Education Department to cancel up to $10,000 in student-loan relief to eligible borrowers (those with a gross income below $125,000), and up to $20,000 for qualifying Pell Grant recipients (those who come from lower-income households). Cardona justified the plan as aimed at ensuring that “borrowers are not in a worse position financially due to the pandemic with regard to their ability to repay their loans.”

So, the legal question on the merits of the case is whether the power Congress handed to the Education Department to “modify” loan programs in national emergencies includes the power to cancel loans—or whether only Congress itself can take such a step. The states argue that there is no “real connection to a national emergency” here because borrowers cannot argue that COVID-19 is the direct cause of their financial struggles, which “are influenced by myriad other factors, including the President’s fiscal policies and geopolitical events.” Moreover, as a matter of atmospherics, Biden’s move feels uncomfortably political: He campaigned on a platform that promised to cancel $10,000 in student debt per person and to forgive debts for students from public colleges and Historically Black Colleges and Universities, and was criticized during his first year in office for not following through on that promise.

From a judicial perspective, whether “modify” includes “cancel” is a question that by definition lacks any certainty—it can only be answered through the exercise of subjective discretion. That discretion will not be exercised by the electorally accountable president or members of Congress, but instead by a handful of unelected judges who serve for life.


The separation of powers implications of the case come in many flavors. For starters, as with Texas’s six-week abortion ban and OSHA’s vaccine mandate, the justices did not follow the usual path of letting a thorny legal conundrum percolate through the lower courts, present itself to the Supreme Court through a writ of certiorari, and then await full briefing and oral argument along with the rest of its docket.

But the bigger problem has to do with what’s known as Article III standing to sue. The justices are only constitutionally authorized to hear “cases,” which the Constitution does not define, but which has long been interpreted to require an actual, imminent, particularized injury on the part of the plaintiff. The notion is that, without a concrete injury, litigants can just sail into court with generalized grievance as taxpaying citizens and get federal judges to make national policy, bypassing the ballot box altogether. Here, the lower federal court dismissed the states’ complaint for lack of standing, because the strongest hook for articulating an injury was that a nonprofit entity in Missouri that services federal loans would suffer financially because of the plan. This attenuated injury to Missouri is of a kind that the Supreme Court often rejects; the justices could easily have passed on this case on standing grounds, allowing the political branches to duke it out. The fact that the Court’s conservative majority jumped into the fray signals that it intends to make national policy around student loan debt.

What’s more, the notion that states can second-guess presidents by claiming financial injury in federal court is troubling in and of itself. When it comes to individuals, the Supreme Court has long rebuked what’s known as taxpayer standing—voters must go to the ballot box rather than the courtroom if they seek to effect nationwide policy. But in this and other cases this term, including one challenging Biden’s immigration policy, the Court is playing footsie with the notion that states can claim some form of fiscal injury by virtue of a federal policy and get the federal courts to step in. Of course, states can always find a way to make that argument. So this theory of standing could have vast implications for the relationship between states and the federal government—in particular, the presidency.


If the Court goes to the merits (which it likely will) and finds that the Education Secretary overstepped his legal authority (again, a strong possibility), what does it mean for the power of Congress to tap federal agencies to fill in the blanks of widely worded legislation?

This is where this case could really make a mark. Consider last year’s case West Virginia v. EPA, in which the Court struck down a hypothetical regulation aimed at combating climate change (yes, that’s not a typo, no regulation was even on the books, but the Court considered the merits of a conceivable regulation anyway). The Court did so using a new judicial concept known as the “major questions doctrine,” which essentially is a swipe at congressional handoffs of regulatory power to agencies. In “extraordinary cases,” the Court will now ignore the statutory marching orders and declare agency actions judicial no-go’s. The problem is, the Court gave no criteria for when matters are so major that Congress cannot give them to federal agencies to handle. No surprise that the states are arguing that student loan policy is a major question, too.

In the meantime, millions of folks with student debt are on the edge of their financial seats. (The portal for applying for loan forgiveness has been closed since November, with loan repayments paused pending a ruling by the Supreme Court.) These voters, many of them under the age of 30, can only hope that Biden can (versus will) come through for them—and barring that, fantasize that Congress will step in even though the pandemic is nearly “over.” The most likely scenario is that the real bosses these days, the nine folks in black robes, will tell them they’re out of luck.

Kimberly Wehle

Kimberly Wehle is a contributor to The Bulwark. She is a visiting professor of law at American University’s Washington College of Law in Washington, D.C. She is also a professor at the University of Baltimore School of Law, a former assistant U.S. attorney, and an associate independent counsel in the Whitewater investigation. An ABC News legal contributor, she is the author of three books with HarperCollins: How to Read the Constitution—and Why, What You Need to Know About Voting—and Why, and, most recently, How to Think Like a Lawyer and Why—A Common-Sense Guide to Everyday Dilemmas. Twitter: @kimwehle.