About 9 million people received emails saying their student loan application was approved

The Biden Administration’s Student Loan Forgiveness Case Revisited in the Presence of an Inflationary Pandemic

The fate of the major student loan forgiveness program rests with the US Supreme Court and it could be as late as summer before the justices rule on whether it can take effect.

The department reversed course on Thursday. According to its website, privately held federal student loans must have been consolidated before September 29 in order to be eligible for the debt relief.

Starting in July, borrowers will receive some credit for past payments when they consolidate older loans into federal Direct Loans in order to qualify for the program. When they consolidated, borrowers lost their progress toward forgiveness. After July, they will receive a weighted average of existing qualifying payments toward PSLF.

The lawsuit was brought by seven states and Judge Autrey did not rule on the larger issue. Instead, he said the states had not suffered injuries of the sort that gave them standing to sue.

The Biden Administrations mass debt cancellation is one example of a long line of illegitimate regulatory actions. The office of the Nebraska Attorney General said there was no statute that would allow Biden to relieve millions of people of their obligation to pay loans.

The white house said that Republican officials from six states are fighting to stop relief for borrowers buried under mountains of debt.

“The President and his administration are lawfully giving working and middle class families breathing room as they recover from the pandemic and prepare to resume loan payments in January,” he said.

The Student Loan Cancellation Project: The Biden Administration Is Going to a Landlords’ Attorney’s Litigation

The Biden administration made the announcement hours after the lawsuit was filed in order to avoid the expense of state taxes that the borrower would otherwise avoid.

The individual who received a federal Pell grant will be eligible for up to $20,000 of debt forgiveness. Each year, millions of low-income students are awarded grants based on the factors of their family’s size and income, as well as their college costs. They are more likely to have trouble paying their studentloans and go into default.

The CBO cost estimate should be viewed over a 30-year time period and came out of the Biden administration’s own analysis two days later. It predicted the program would cost $379 billion over the course of the next decade and an average $30 billion per year.

The nonpartisan Congressional Budget Office said in a report released last week that the student loan cancellation could come at a price of $400 billion but noted that those estimates are still “highly uncertain.”

The Higher Education Relief Opportunities for Students Act of 2003 gave the government the authority to offer relief, Elizabeth Prelogar wrote in court papers. Under the law, passed to help active-duty military in the wake of the September 11, 2001, terrorist attacks, the government says the secretary of education has the authority to act in a national emergency to make sure borrowers are not left worse off with respect to their loans than they were before the emergency.

The Job Creators Network is going to file a lawsuit once the student loan forgiveness plan is formal, according to an announcement on their website.

Abby Shafroth, staff attorney at the nonprofit National Consumer Law Center, previously told CNN that she believes the merits of the Biden administration’s legal statutory authority are strong and that it’s unclear who would have legal standing to bring a case and want to do so. To justify a lawsuit a procedural threshold needs to be met.

If the standing hurdle is cleared, a case would be first heard by the district court, which may or may not prevent the cancellation before a final ruling on the merits is made.

How the Biden Administration is Fighting Student Loan Scams: The Biden Forgiveness Program is Christmas, Thanksgiving, and Fourth of July

Supreme Court decisions have ruled against the Biden administration’s actions, and it is argued that they overstepped their authority. The justices stripped the Environmental Protection Agency of its authority to set certain climate change regulations last year, and limited the federal government’s power to implement a Pandemic- related eviction moratorium in 2021 and mandate Covid-19 vaccinations in 2022.

Senior administration officials announced Wednesday that the Biden administration is increasing its efforts to fight student loan con artists who take advantage of borrowers applying for forgiveness.

The Department of Education sent an email to about nine million people that said their student loan application had been approved, adding to the confusion surrounding President Joe Bidens debt relief program.

“This Biden forgiveness thing is Christmas, Thanksgiving and the Fourth of July all rolled into one for the scammers,” says Betsy Mayotte, the president of the Institute of Student Loan Advisors, a nonprofit that offers free counseling to borrowers.

“Today is a step in the right direction,” Mayotte said. There are only a couple of things we can do to prevent fraud. One of the things is to educate borrowers and the other is to enforce it.

In order to hold scammers accountable, the administration plans to increase collaboration between the Department of Education and other federal agencies, including the Federal Trade Commission and the Consumer Financial Protection Bureau. The administration will also share scam complaints with states more frequently, so state attorneys general can act faster to stop scams in their own jurisdictions, and plans to partner with social media influencers on a public awareness campaign.

“It’s an all-government approach, because what we know is it’s already happening, that there are evil people who will be trying to use a program like this, that’s trying to help people, and run their own frauds and scams to somehow get money or personal information about people,” says Richard Cordray, the chief operating officer of Federal Student Aid, a branch of the Education Department.

“What we’re trying to do here is to get as much relief as possible to the hard working former students who deserve this relief,” Cordray added. “We’re moving at warp speed to get the application and the process going here.”

What will the forgiveness application look like if the application goes live? A briefing session of the Treasury Department on the issue of borrowers’ security in debt forgiveness

The administration urged borrowers to sign up to be notified when the application is available, to make sure their loan servicers have their current contact information and to report any scams they encounter to the FTC.

One way to avoid scam vulnerability in the first place would be to release more specific information on what the forgiveness application will look like or when to expect it.

The administration wrote in a fact sheet that developing a clear, simple and secure site for borrowers to apply for debt relief and have the most up- to date information from trusted sources is a critical way to prevent scam and protect borrowers.

But in a briefing Wednesday, senior administration officials would not provide any more concrete details on when the application will go live or what the process will look like.

“In one way, it’ll help,” she says. “But if I know the scammers, they’ll use that as an opportunity too: ‘The application’s out. You have to hurry. Time is not long. Now that the applications are out, let us help you to make sure you don’t miss it.’ It is a catch-22.

The Online Application for Federal PLUS Loans, as Informed by the US Department of Education, and a First Circuit Judge’s Benchmark to the Biden Administration

In addition to federal Direct Loans used to pay for an undergraduate degree, federal PLUS loans borrowed by graduate students and parents may also be eligible if the borrower meets the income requirements.

The online application will be short, according to the Department of Education. The applications will not need to be uploaded or submitted with Federal Student Aid ID.

Unless the US Supreme Court allows the program to move forward, borrowers will not see debt relief. The justices are expected to make a decision by June.

There are a handful of states that may tax the debt discharged under Biden’s plan if state legislative or administrative changes are not made beforehand, according to the Tax Foundation.

Republican states are leading the charge. A lawsuit was filed last week by the Arizona Attorney General, who said his state could be hurt by the forgiveness plan.

Brnovich, a Republican, argues that the policy could reduce Arizona’s tax revenue because the state code doesn’t consider the loan forgiveness as taxable income, according to the lawsuit. The complaint also argues that the forgiveness policy will hurt the attorney general office’s ability to recruit employees. Some potential job candidates might not view the Public service loan forgiveness program as a benefit if their student loan debt is already canceled, according to the lawsuit.

“Make sure you work only with the US Department of Education and our loan servicers, and never reveal your personal information or account password to anyone,” it said in an email to borrowers.

Those who meet the program’s annual income limits are able to apply online.

The Education Department, which holds $1.6 trillion in student loan debt and will manage the cancellation process, quietly opened the application website for testing on Friday night. More than eight million people had already applied by Monday, Mr. Biden said. The form is available in English and Spanish, and is intended to work on desktop computers and mobile devices.

Supreme Court Justice Amy Coney Barrett rejected a challenge to the Biden administration’s student loan forgiveness program on Thursday, declining to take up an appeal brought by a Wisconsin taxpayers group.

This case will continue in the Seventh Circuit, where it is being heard on appeal. A federal district court judge ruled that the taxpayer group lacked standing and dismissed the lawsuit. In short, the challengers, simply as taxpayers, could not show a personal injury as is required to bring a suit. In 2007, the Supreme Court said that if every taxpayer could challenge Government expenditure, the federal courts would cease to be courts of law.

Barrett acted alone because she has jurisdiction over the lower court that ruled on the case. She didn’t want the matter to go to the full court. Her denial was considered a single sentence on the docket.

The lawsuit brought by six Republican-led states was rejected because they didn’t have the legal right to bring it.

The states are expected to immediately appeal. That would send the case to the 8th Circuit Court of Appeals, where it is likely to face a panel of conservative judges.

Arizona Attorney General Mark Brnovich and conservative groups are facing lawsuits from the Biden administration.

The Simplest Online Application for Student Loan Forgiveness: An Analysis Applied to the Biden Administration and the Brown County Taxpayers Association

Justice Amy Coney Barrett, who is assigned to the Seventh Circuit Court of Appeals, was the one who received the emergency application. Presumably the court’s other justices agreed with her decision.

Within hours of the Supreme Court action, another closely watched challenge to the program, this one brought by six GOP-led states, was tossed out by a federal district court in Missouri.

The Brown County Taxpayers Association, a group of 100 taxpaying individuals and business owners in Wisconsin, brought an emergency request to the Supreme Court.

The plan has been challenged by several other conservative organizations. Those lawsuits may face the same difficulties in showing a harm that will keep them alive.

The Biden administration unveiled its student loan forgiveness application online a week ago. Twitter lit up with joyful posts about debt relief, as well as about the surprisingly easy process.

A startling contrast to the six people who successfully negotiated the website for the government on the day of its launch is that eight million people applied for the website in the first weekend it was open. As professors of public policy, we have shared our research on how administrative burdens make vital public services harder to access with the Biden administration, and we spoke with Department of Education officials about how many people might participate in the program (though we played no role in helping design this process or the application itself). It was incredible for us to see how easy it is to apply for debt relief.

Setting aside the conflict over policy, the streamlined application shows what is possible when government prioritizes the public in the delivery of public services. The form can be completed in just a couple of minutes. It works on both a computer and a smartphone, and it is available in Spanish and English. The form, confirmation page, and welcome page are just a few of the basic pages. Beneficiaries don’t have to create an account with a password in order to get started, a relatively small step that can actually discourage people from starting. Applicants need names, social security numbers,dates of birth and phone numbers. That’s it.

High-Tension Student Loan Forgiveness: Why the Texas Supreme Court Decided Not to Indict a Loan-Forward Program

But the Texas federal judge found that the law does not provide the executive branch clear congressional authorization to create the student loan forgiveness program.

“The program is thus an unconstitutional exercise of Congress’s legislative power and must be vacated,” wrote Judge Mark Pittman, who was nominated by then-President Donald Trump.

The Justice Department said Thursday that it would appeal the decision, and White House press secretary Karine Jean-Pierre said in a statement that “we strongly disagree with the District Court’s ruling on our student debt relief program.”

“For the 26 million borrowers who have already given the Department of Education the necessary information to be considered for debt relief – 16 million of whom have already been approved for relief – the Department will hold onto their information so it can quickly process their relief once we prevail in court,” Jean-Pierre said.

They argued that they could not voice their disagreement with the program’s rules because the administration did not put it through a formal notice-and-comment rule making process under the Administrative Procedure Act.

“This ruling protects the rule of law which requires all Americans to have their voices heard by their federal government,” said Elaine Parker, president of Job Creators Network Foundation, in a statement Thursday.

Editor’s Note: Steve Vladeck is a CNN legal analyst and a professor at the University of Texas School of Law. He is the author of a new book about the Supreme Court and how it uses power to mess with the country. The opinions expressed in this commentary are his own. CNN has more opinion.

Second, the rest of Pittman’s analysis – that there was no means by which the Biden administration could have expanded the eligibility criteria, since the program itself is, in his view, unlawful – makes it impossible for Brown or Taylor to show how their injuries could have been redressed by the courts. Brown and Taylor had nothing as a result of Pittman’s ruling blocking the program.

In a nutshell, a case’s standing has three elements: That the plaintiff shows an “injury in fact”; that the injury is “fairly traceable” to the defendant’s allegedly wrongful conduct; and that the courts are able to provide at least some redress for their injuries.

Although standing is a technical doctrine it is also important. Justice Alito wrote in his opinion that no principle was more fundamental than the judiciary’s proper role in our system of government.

The idea is that federal courts are not in a position to answer hypothetical questions. Only if a party can show how they’ve been harmed by the challenged policy in a manner that is concrete and particularized – real and discrete – will they (usually) be allowed to challenge it.

If the complaint is just that the government is acting unlawfully in a way that doesn’t affect plaintiffs personally, that’s a matter to be resolved through the political process – not a judicial one. As Justice Antonin Scalia put it 30 years ago, “vindicating the public interest (including the public interest in Government observance of the Constitution and laws) is the function of Congress and the Chief Executive.”

The public discourse surrounding the student loan debt relief program, as well as the fact that not every policy dispute should lead to litigation, is a good reminder that the courts don’t need to resolve every contentious issue in American politics.

Instead, objections to the Biden program present the classic kind of “generalized grievance” that the Supreme Court has long held federal courts lack the constitutional authority to resolve – like when a taxpayer tried to sue the CIA in an attempt to force the agency to provide a public accounting of its (allegedly unlawful) expenditures.

For if Justice Alito was right that “no principle is more fundamental to the judiciary’s proper role in our system of government” than the idea that courts can only decide cases that present actual, justiciable controversies between adverse parties, then that principle ought to prevail even against the most strenuous (if not well-taken) objections to the government policy being challenged. The courts are not acting as courts but as courts because they are taking sides inpolicy debates that no one chose to resolve.

The Biden-Harris debt forgiveness program has been delayed by a lower-court order, but borrowers are still being enrolled

But no debt has been canceled yet. The plan was put on hold indefinitely as legal challenges work their way through the courts. A decision on two cases in which the forgiveness program is involved will be made by late June or early July.

The White House says Tuesday’s extension will alleviate uncertainty for borrowers as the administration asks the Supreme Court to review lower-court orders blocking Biden’s student debt relief program.

“I want borrowers to know that the Biden-Harris administration and we are going to do all we can to deliver student debt relief to tens of millions of Americans,” Cardona said.

The student loan forgiveness program, which President Biden instituted, has been put on hold by the Supreme Court due to a second case that will be argued in February.

In another legal challenge, two borrowers who do not qualify for full debt relief say that they were denied an opportunity to comment on the secretary of education’s decision to establish the forgiveness program.

The justices will hear a different case this term in regards to a group of states. The court didn’t say if the two cases would be consolidated.

The program has already been frozen because of legal challenges, so the action Monday does not change the state of play. It does, however, add new plaintiffs to the mix.

In the case at hand, Solicitor General Elizabeth Prelogar had urged the justices to lift a block on the program and hear oral arguments this term. They agreed only to the latter request.

“This is the second of two cases in which lower courts have entered nationwide orders blocking the Secretary of Education’s plan to use his statutory authority to provide dept relief to student-loan borrowers affected by the Covid-19 pandemic,” Prelogar argued in court papers.

The White House’s estimate was that 16 million borrowers had been approved for the program. It’s not sure how many got Tuesday’s email reversal.

“Communicating clearly and accurately with borrowers is a top priority,” a spokesperson for the Department of Education says. “We are in close touch with Accenture Federal Services as they take corrective action to ensure all borrowers and those affected have accurate information about debt relief.”

The Department of Education will review more student loan forgiveness applications if and when the government’s case prevails in court, according to the most recent, accurate emails sent to borrowers.

“The problem for us is that some clients have applied for other relief measures, like [public service loan forgiveness] and think the email they got is related to that versus the Biden-Harris cancellation,” she says.

Persis Yu, deputy executive director and managing counsel for the Student Borrower Protection Center, says that this email puts many borrowers back “in limbo.”

It may not seem like much, but borrowers are trying to figure out how to move on after Tuesday’s email. They’re hanging on the words and they matter.

Carolina Rodriguez says she’s hearing a similar sentiment when speaking to her clients at the Education Debt Consumer Assistance Program in New York. She says borrowers have reached out to confirm that they can’t do anything during the waiting period.

With the Supreme Court due to hear the case early in February and a decision later this spring, borrowers will be in limbo for at least a few more months.

The pandemic-related pause on student loan payments remains in place. But a restart date is up in the air, dependent on when the Supreme Court rules on the forgiveness program.

The existing Public Service Loan Forgiveness program is changing in July. A new repayment plan that is based on income is in the works.

The Biden’s forgiveness program has created confusion among borrowers. There are a lot of questions surrounding student loans this year.

It’s not clear if the program is legal and can move forward. There will be no debt discharge under the program until then.

For the third year in a row, federal student loan borrowers don’t have to make any payments on their loans for the first week of the New Year because of the H1N1 swine flu outbreak.

The yearslong pause cost the government $155 billion through the end of 2022, according to an estimate from the Committee for a Responsible Federal Budget.

New Rules to Renew the Postgraduate Student Loan Program (PSLF) and a Pay-Per-Sample Repayment Plan for Public Sector Jobs

A yearlong waiver that expanded eligibility for the PSLF program expired on October 31, but some of those temporary changes will be made permanent starting in July.

Under the new rules, borrowers will be able to receive credit toward PSLF on payments that are made late, in installments or in a lump sum. Prior rules only counted a payment as eligible if it was made in full within 15 days of its due date.

The time spent in deferment or forbearance will count. These periods include deferments for cancer treatment, military service, economic hardship and time served in AmeriCorps and the National Guard.

The new rules will simplify the process of meeting the requirement of being full-time employee in a public sector job. The new standard will consider full-time employment at 30 hours a week. It will help the adjunct faculty at public colleges get into the program.

The Biden administration has proposed a new income-driven repayment plan that is intended to make payments more manageable for borrowers, though it’s unclear when it could take effect.

The Fed’s Preferred Rate Higgs: The Stock Market During the Great Wall Wall-Marckian Outburst of January 2023

CNN Business first published a version of the story. Before the Bell newsletter. Not a subscriber? You can join right here. You can listen to the audio version in the newsletter by clicking the link.

The possibility of a 2023 market rally ground to a halt last week amid an onslaught of unfortunate inflation and economic data that spooked investors and increased the likelihood that the Federal Reserve will continue its economically painful rate hikes campaign for longer than Wall Street hoped.

All major indexes notched their largest weekly losses of 2023 on Friday. The S&P 500 fell while the market was up. The stock market fell even as the tech-laden stock market fell.

What’s happening: After months of decline, the pace of inflation is not going up. The Fed favored inflation gauge came in hotter than expected in January.

Prices rose a whopping 5.4% in January from a year earlier, the Commerce Department’s Bureau of Economic Analysis reported. In December, prices increased.

Source: https://www.cnn.com/2023/02/26/investing/stocks-week-ahead/index.html

Immaculate Disinflation and Its Impact on the US Economy and the Correlation Between Stock Prices and the Fed’s First Order Inflation

The paper presented at New York’s Booth School of Business argued that the disinflation will be slower and more painful than markets think.

The paper said that the disinflations caused by monetary policy tightening are associated with recessions. An immaculate disinflation would be something you have not seen before. It is implied that inflation can fall quickly to the Fed’s 2% goal without any serious economic damage.

Several Fed presidents, governors and top economists were on hand at the Booth School forum to discuss the paper and monetary policy on Friday. Most of the people who spoke expressed concern about inflation and the market reaction.

The Cleveland Fed President stated that the overall pace of inflation remains high and could go on for a long time even though prices have moderated from their recent high.

Susan Collins, President of the Boston Fed, said at the conference that she expects further rate increases to reach a sufficiently restrictive level then holding there for some time.

On Friday, Fed Governor Philip Jefferson was more befuddled by inflation and didn’t know what to make of it. The inflationary forces are a mixture of temporary and long-lived elements that defy simple, parsimonious explanation, he said. It’s a million-dollar word for frugal.

Economists warned that there is more pain to come. “It’s important that markets understand that ‘no landing’ is not an option,” said Peter Hooper, vice chair of research at Deutsche Bank, an author of the report.

While recent data has signaled that the US economy remains strong, “by the time we get to the middle of this year we expect to see some bad news coming and the sooner the markets get that message the more helpful it will be to the Fed,” he said.

The final word was summed up by a former Bank of England Governor. Given the complexity of the current monetary situation, he said, “I wouldn’t want to give advice to any central banks about what we should do.”

Researchers at the Federal Reserve Bank of New York have warned that the US could face a new credit crisis if President Joe Biden does not fulfill his student loan forgiveness plan.

After an injunction by the 8th US Circuit Court of Appeals, the forgiveness proposal is on hold. The Supreme Court of the United States is expected to make a decision in June of 2023.

Source: https://www.cnn.com/2023/02/26/investing/stocks-week-ahead/index.html

The Justices of the High Court of First Instance Against State Taxes and Pessos: Their Experiences with Student Borrower Protection Center

“We note a stark increase in new credit card and auto loan delinquency for borrowers with eligible student loans over the past few quarters, growing at a faster pace than those without student loans and those with ineligible loans,” they wrote.

The data “may be suggestive of problems to come, a sign of economic distress that may appear particularly concerning when the burden of student loan payments resumes.”

In addition to their cozy government salaries, some of the justices have been paid handsomely through lucrative book deals or teaching gigs, according to their financial disclosures, which provide limited information about their finances, those of their spouses and various reimbursements for travel. Among that group is Sotomayor, Gorsuch and Barrett, who have all received over six figures in book royalties or publishing deals in recent years.

The court is also comprised of some of the nation’s brightest legal minds from a small number of prestigious schools, yet another factor that underscores their distance from the borrowers who could benefit from the debt relief assistance. Most of the current members attended an Ivy League law school.

Some of the justices received financial assistance to attend school. Thomas received a scholarship from Holy Cross College to help pay for his undergrad degree, while he and Sotomayor also received scholarships from two other universities. They have come from different areas of the world. Thomas, for instance, grew up in poverty in Pin Point, Georgia, and is the court’s leading conservative justice.

I think it’s right to say that the justices didn’t experience the benefits of the president’s debt relief program. Mike Pierce, executive director of the Student Borrower Protection Center said that the justices needed to understand the limits of their own life experience to impartially consider the case.

The questions he will be asking are ones that will tee up the experiences of the people who will benefit from the project, and give the solicitor general a chance to lay out the government’s economic rationale.

The Guaranteed Student Loan Program: When the Federal Mortgage Program Jumped into Public Education and Its Role in the Emergence of Private Student Loans

Student debt was never always a crisis. The modern federal education borrowing system came from a series of legislative moves aimed at helping more people have access to college – but it came with some unintended consequences.

College graduates have more money than people who do not have a degree. In 2021, full-time workers age 25 and older with a bachelor’s degree out-earned those with a high school diploma and no degree by about $27,000 annually, when comparing median salaries, according to data from the Bureau of Labor Statistics.

College costs have gone up more than inflation, says the president of the Institute for Higher Education Policy.

In the 1968-1969 academic year, adjusted for inflation, it cost $1,545 to attend a public, four-year institution, according to data from the National Center for Education Statistics. Tuition, fees, room and board are included. In the 2020-2021 school year, $29,033 was recorded.

The National Student Loan program, aimed at expanding access to higher education, was launched in 1958. Created from the National Defense Education Act, it was the first federal student loan initiative for those studying certain subjects to improve science, mathematics and engineering skills during the Cold War.

The Guaranteed Student Loan program is an original program that is similar to the mortgage program, according to a historian and associate professor at Loyola University Chicago.

It solved for the government the challenge of how to get lenders involved with such a risky financial investment: The loan did not come from the federal government, but instead, the government assured repayment to bankers willing to give loans, Shermer said.

She said that because the federal mortgage program was a guide the government could avoid direct investment into colleges. The federal government cannot take away your degree in the same way a bank can repossess your house.

We will use the lending that made a country of renters into a nation of homeowners when we think it is un-American to have a free ride. But just like we now know how the mortgage program exacerbated racial and gender inequality, the same thing happened with the student loan programs too,” she said.

Fannie Mae’s program during the Great Depression made it easy to buy and sell mortgage debt and create more reliable funding for houses, which led to the emergence of private student loans, along with other financial products.

This was the most important time in the history of loans, she said, as the availability of financial aid to both for-profit and nonprofit companies allowed for the rise of private student loans.

The students needed more money in the 1970s because of the rising cost of tuition. Since there was a limit to how much students could borrow in federal loans, private loans were needed as a supplement.

It is certain that you are going to need to borrow something to get through college. “It’s like that perfect storm,” she added.

“As every legislature knows, if you cut the appropriations for higher education, colleges and universities can just increase what they charge. Just raised tuition, according to Shermer.

After finding out how poorly managed this thing was, the federal government realized that it would be cheaper to just lend directly to students and parents.

The rate of default was reduced by several initiatives in the intervening years. According to the Institute for Higher Education Policy, in 1993 there was a cap on the amount of money that qualified borrowers could pay under the Income-Consolidating Repayment Plan.

The Pay As You Earn program, launched in 2010, provided the guidelines many borrowers still use today – capping payments at 10% of discretionary income and cancellation of loans after 20 years.

Source: https://www.cnn.com/2023/02/27/politics/us-student-loan-debt-timeline/index.html

The Case of the Biden v. Nebraska Student Loan Forgiveness Program in a Supreme Court Benchmark on the Role of the Major Questions Theorem

Even if the one-time loan forgiveness program is rejected by the Supreme Court, the proposed repayment plan is less likely to face the same legal challenges.

The plan would cap payments at 5% of the borrower’s discretionary income, create a shorter time to forgiveness and cover unpaid monthly interest when balances are low.

The program is being challenged by Republican-led states and conservatives who believe it amounts to an attempt to wipe out $430 billion of student loan debt.

In 2021, for instance, the court invalidated the Biden administration’s Covid-19-related eviction moratorium issued by the US Centers for Disease Control and Prevention holding that such a program needs to be specifically authorized by Congress. In 2022, the court blocked a nationwide vaccine mandate for large businesses, sending a clear message thatOccupational Safety and Health Administration had overstepped its authority.

The Tuesday cases will highlight an important threshold question that could roadblock the court from reaching the merits of the dispute, whether the parties behind the challenge have the legal right or not.

The initiative came under immediate attack. A district court blocked the program citing the so-called major questions doctrine. Under the doctrine, federal agencies cannot regulate matters of “vast economic and political significance” without clear authorization from Congress.

The Supreme Court used the doctrine in a 6-3 decision that curbed the Environmental Protection Agency’s ability to regulate carbon emissions from existing power plants.

The justices agreed to hear two cases on an expedited basis after they declined to do so. The first dispute, Biden v. Nebraska, pits the administration against a group of Republican-led states. Two individuals who did not qualify for the program were initially brought by the Department of Education to argue that the government did not follow proper rulemaking process when put in place.

Major Questions: The Biden Administration’s Violation of the HEROES Act and the Landlord Delinquency Clause

As for the payment obligations, they were set to resume last January, but the president issued an extension due to the fact that his loan forgiveness program was stalled in court.

The Biden administration believes that the secretary of education had authority to provide relief to borrowers who make less than $125,000 annually in order to protect them against financial harms brought on by the Pandemic.

She warned the justices that ending the pause in payments without providing additional relief for lower-income borrowers would “cause delinquency and default rates to spike above pre-pandemic levels.”

She stated that the grant of authority is central to the HEROES Act and was not reliant on vague, cryptic, ancillary, or modest statutory language.

She said that neither the States nor the two individuals behind the challenges have the right to file a suit. She warned that if the justices held otherwise, it could have “startling implications” going forward.

She said that all federal actions have some effect on state finances.

Nebraska Attorney General Michael Hilgers is one of the attorneys who have objected to the Biden administration’s use of the Pandemic as a ruse to cover up its true intent.

“Canceling hundreds of billions of dollars in student loans – through a decree that extends to nearly all borrowers – is a breathtaking assertion of power and a matter of great economic and political significance,” triggering the major questions doctrine, Hilgers told the court. Such a cancellation power “is the type of major question that courts presume Congress reserves for itself.”

Hilgers rejected the government argument that the states would not be able to show the harms that they would suffer in court. He put forward multiple theories of standing that centered on the idea that the states would lose tax revenue.

MOHELA vs. Biden and the Six States that Can’t: Does the Biden Student Loan Debt Problem Survive?

MOHELA is an independent corporation that has explicitly said it is not involved in the state’s challenge. One of the largest holders of student loans in the country is a state-created entity. The state of Missouri claims that because MOHELA would lose servicing fees on federal loans that are discharged, the agency might fail to make its required payments to the state treasury.

The red states are supported by a group of former government officials including former Trump attorney general William Barr, and others who say that Biden shouldn’t be able to forgive student loan debt.

The president was under pressure from his own party to announce the program in August 2022, while the Biden administration was defending it in court.

The Biden plan, however, has not yet paid out any money because two lower courts have put the program on hold, sending the case to the Supreme Court. The justices will hear arguments on Tuesday regarding the challenge to the Biden plan brought by six states.

Yes, says University of Texas law professor Stephen Vladeck, who consulted informally with the White House on the case. The statute’s words are clear and expansive according to him.

The secretary of education received a grant of authority from Congress. The plain text of the statute talks about the secretary’s power to waive or modify statutory provisions for programs like federal student aid.

But Case Western University law professor Jonathan Adler says waiving or modifying loan requirements is not the same thing as canceling the obligation to pay back some or all of a loan.

State Suspensions and the Biden-Southern-Consumption Economism: Commentary on the Study of State Litigation

That said, the case could have an even greater impact if the justices decide that the states don’t have the right to sue at all because they can’t show they have suffered any concrete harm.

In recent years, Republicans have repeatedly parlayed state lawsuits into a forceful tool to get the conservative court to block the Biden administration’s policies. Democrats have also used it, but less successfully.

The numbers of these lawsuits is skyrocketing, and it is at least possible that the Supreme Court would like to see fewer of them. They would need to limit the doctrine of legal standing since it has lately been interpreted in different ways.

Professor Vladeck thinks that won’t fly because it it purely speculative. He points to the Supreme Court’s opinion for a decade that future injury can’t be the basis of a lawsuit unless it’s imminent.

Student loan forgiveness could come up at Tuesday’s argument. After all, the premise of the loan program is that younger people with loans, in particular, have suffered economically during the pandemic, and are in desperate need of some loan relief. Biden says that the emergency will be over on May 11. The administration claims that the “downstream effects” of the pandemic will nonetheless continue for quite some time after the end of the emergency. The argument could be a problem for the Supreme Court.