“SCOTUS, can you hear us?” the woman at the lectern shouted, repeating herself for emphasis. “Debt relief is legal! Debt relief is just! And debt relief is necessary!” The nine berobed men and women in the building behind her could not, of course, hear her, nor were they there to listen to what she or anyone else out in the cold had to say. When a man with a bullhorn led a chant of “Whose court? Our court!” a short while later, he was engaging the crowd in what might most accurately be termed an exercise in magical thinking.
It was late February, and the Supreme Court was hearing oral arguments in two cases challenging President Joe Biden’s student debt cancellation program, created in August, which promised to forgive up to $20,000 of the federal loan balances of tens of millions of student borrowers. Both challenges to Biden’s program rested on improbable claims made by dubious plaintiffs whose efforts it would be easy to describe as frivolous, were the stakes not so terribly high. And both challenges involved their own convoluted debts: The slightly more substantive case, brought by the Republican attorneys general of six states, claimed that the forgiveness program would cause MOHELA, a Missouri loan servicing agency, to default on debts it owes to the state; the decidedly sillier, brought by two Texans with student loans not eligible for the full relief, argued that Biden had left them in the lurch by not allowing them to publicly comment on the program. They were asking the court to strike down this loan forgiveness program so that, should the administration decide to propose a new version, they could have the chance to formally ask that their debts be forgiven as well.
The scene at the court was a study in opposites. Outside, the borrowers’ rally had assembled at the behest of about two dozen advocacy groups, including the obvious (the Student Borrower Protection Center, the Debt Collective, and the Student Debt Crisis Center) and the slightly less so (the American Federation of Teachers, the NAACP, and MoveOn). The crowd was raucous. They whooped and hollered. They had microphones and senators and an entire horn section. Some of them had been there all night, waiting in the rain.
Inside, the justices focused on what mattered: semantics. The president had claimed the authority to cancel the debt from a 20-year-old statute, the HEROES Act, that permits the secretary of education to “waive or modify” federal student loans to keep borrowers from becoming financially worse off in the event of a war or national emergency. So, the conservative justices asked, what is the meaning of the word “modify”? Can a waiver be a cancellation? They obsessed over the phrase “half-trillion dollars,” the 30-year cost estimate the Congressional Budget Office had made for the program. Surely, they suggested, Congress didn’t envision delegating such a big number to presidential whim.
The government’s unflappable lawyer, Elizabeth Prelogar, reminded the bench that the payment pause, which began under Donald Trump, was in fact more expensive on an annual basis, having already cost more than $100 billion, according to the Government Accountability Office. And anyway, the statute was very clear, even if Congress couldn’t have predicted that it would someday be used for a once-in-a-lifetime global pandemic.
Looking annoyed, Samuel Alito, who may vie with Clarence Thomas for the position of most conservative justice but is without a doubt the most irritable, rubbed his temple and jolted himself back in his chair, which apparently reclines to an almost supine position. At points it appeared to me, as I craned between the marble pillars, that he might be dozing. Justice Brett Kavanaugh, the court’s avowed beer drinker, cracked a few jokes. Meanwhile, in an odd concordance, liberal Elena Kagan and conservative Amy Coney Barrett were not having what some of the plaintiffs’ lawyers were dishing up, which boiled down, essentially, to one bad-faith argument: This program leaves some people out; therefore it shouldn’t exist.
Advocates of the forgiveness plan argue that the legality of Biden’s program is unimpeachable. Yet given the bench’s sharp rightward tilt, it is entirely unclear whether it will survive the six conservative justices’ scrutiny; the hearings revealed them, as a rule, to be incisively critical of its cost and broadness. In the wake of oral arguments, a host of major news outlets pounced (perhaps overzealously) on their critiques to suggest it was doomed. Headlines in The New York Times, The Wall Street Journal, and The Washington Post all highlighted the justices’ apparent skepticism, and another Times article said that the court “seemed poised to … kill the Biden administration’s plan.”
Nevertheless, if the conservative majority was uniformly against the program itself, it did not appear uniformly receptive to the plaintiffs’ claims. And before the court can fully debate the merits of the cases, it must decide whether the plaintiffs have standing—in other words, whether the rather peculiar grievances they have lodged represent any tangible harm. Do the complaints have any real substance, or are they essentially invented? Thus the administration, upward of 40 million student debtors, and the nation at large wait in a state of exquisite uncertainty. For if the program falls, the consequences could reach well beyond the fate of student debt cancellation. A ruling against the administration would not only disappoint debtors; it could open the door to an endless flood of lawsuits by states, creditors, or really anyone over policies they don’t like.
At first glance, it’s a bit hard to see what Myra Brown, one of two plaintiffs in the Texas case, could have against student debt cancellation. By all appearances, Brown’s post-college life has been successful. After graduating from the University of Texas at El Paso in 1993, she made her way to Southern Methodist University for graduate school, where she got a master’s degree in business in 2002. Although she took out thousands of dollars in federal student loans to get her degrees, her debts don’t seem to have held her down. Today, she’s the owner of a small business, High Value Signs. Her online portfolio displays photos of colorful menu boards at ice cream shops and juice bars, wraparound trade-show booth displays, a jaunty wall sign for a “lava grill and lounge” called Stonz. Her slightly cramped Irving, Texas, shop occupies one-half of a nondescript brown building in a sprawling office park just a hop, skip, and a freeway jump from the Dallas/Fort Worth International Airport.
While it’s to be expected that a business so reliant on a healthy retail economy would take a hit under the stay-at-home days of Covid, Brown was able to benefit from a huge pandemic relief program to keep things afloat. In 2020, she borrowed $48,000 from the federal government’s temporary Paycheck Protection Program. For context, that’s about $10,000 more than the debt of the average student loan borrower, and exceeds the more than $30,000 Brown still owes on her own federal student loans. But, as it happened, Myra Brown’s PPP loan was more like a Pell Grant, which doesn’t have to be paid back: In 2022, the federal government forgave all but $4 of her Covid debt, no questions asked.
Today, she seems to be hiring: Her website lists openings for several positions, including sign maker and sign installer. She describes High Value Signs as “a fun place to work” with a “can do,” positive culture, and her website features praise from several satisfied customers.
One might anticipate that a small-business owner like Brown would express gratitude over the government’s unprecedented generosity in keeping her company going in the early months of the pandemic. But, needless to say, Brown doesn’t seem to be very appreciative. Instead, she complains: Because her student loans are held by private lenders, she isn’t eligible to take advantage of Biden’s plan.
Brown’s case was filed with a co-plaintiff, Alexander Taylor, who also took out federal student loans and does stand to benefit from the program. Taylor is suing because he doesn’t feel he’s getting enough of his debt forgiven. Biden’s program, limited to federal loan borrowers with incomes less than $125,000 (or couples making less than $250,000), promises to forgive $20,000 of debt for Pell Grant recipients; $10,000 for everyone else. Because Taylor wasn’t eligible for a Pell Grant while in school, he can expect to get only $10,000 canceled.
On their face, Brown and Taylor’s complaints should be easily dismissed. In general, citizens can’t just sue the federal government because they don’t like the policies it enacts—you can’t sue to end Medicaid, for instance, because you make too much money to qualify for it. But Brown and Taylor claim that they have standing because the Biden administration violated the Administrative Procedure Act, or APA, when it created the cancellation program. The administration should have offered the opportunity to publicly comment on the program, they argue, an opportunity they allegedly would have used to request expanded forgiveness criteria. So, to recap: Because they were not allowed to officially ask for forgiveness, they are suing to make sure no one else can get it—an extremely wonky and far-reaching version of “If I can’t have you, no one can.”
In November, Mark Pittman, a Trump-appointed Texas district court judge, agreed with them, even though the Texas plaintiffs’ argument relies on a central flaw: When Congress passed the HEROES Act, it explicitly exempted the education secretary from the traditional regulations, like public comment, required under the APA. In other words, Brown and Taylor don’t have a leg to stand on. But Judge Pittman decided that didn’t matter. In his opinion, Biden overstepped his authority in using the HEROES Act to begin with, in part because the national emergency he was seeking to alleviate—the pandemic—is now over.
Pittman’s central argument was that the forgiveness program violated what’s known as the “major questions doctrine.” That’s a relatively new and vague legal premise, only cemented in 2022, that says federal agencies cannot exceed their authority to push policies with extraordinarily wide-reaching economic or sociopolitical consequences. Initially, it was envisioned as an at least putatively reasoned rejection of agencies exceeding their remit. The doctrine can arguably be traced back to a 1994 case involving the Federal Communications Commission. More recently, however, it has become something of a smoke screen for conservatives to swat away executive branch policies they don’t like. Justice Alito put a shockingly fine point on this during oral arguments in the challenges to Biden’s student debt plan. “Let’s say,” the justice mused, that “you simply polled every member of Congress and asked … whether, in the ordinary sense of the term, they would regard what the government proposes to do with student loans as a major question.”
That, to put it mildly, is not how the doctrine was originally construed.
“In this country,” Pittman had written in his order halting the program, “we are not ruled by an all-powerful executive with a pen and a phone.” But if the court chooses to intervene on this particular “major question,” we will be one very long stride closer to an all-powerful judiciary, a role that even some of the Supreme Court justices found an overreach. “You started by indicating that this is one of today’s most debated policy questions,” Justice Ketanji Brown Jackson, the newest member of the bench and among the liberal minority, said to James Campbell, Nebraska’s solicitor general, who pleaded the states’ case before the court. “And you ended by saying that we, the courts, should essentially answer it by invalidating this program.”
One of the many unusual features of these cases is that they skipped several steps to get to the Supreme Court—a process known as certiorari before judgment. After Pittman filed his injunction blocking Biden’s program, the case would normally have gone through an appeals process, which could have taken more than a year. But the 5th U.S. Circuit Court of Appeals refused to lift the injunction before hearing the case, and the 8th U.S. Circuit Court of Appeals had already ruled against the program. So the Biden administration’s best chance for a quick resolution was to push ahead to the next, and highest, level.
A curious and consternating result of this abridged process is that the original cases did not undergo the normal phase of discovery. In other words, the defense counsel wasn’t given the chance to do any real fact-finding on the plaintiffs. In a November filing in the Texas case, the Department of Justice noted that the sum total of information on the plaintiffs there derived from “two affidavits, each totaling 260 words or fewer, asserting their beliefs that it is ‘unfair to exclude [them] from the program.’”
So we know almost nothing about the plaintiffs, beyond what can be gleaned online. And they’re not eager to add to the record. (A spokesperson representing them denied my requests for interviews with Brown and Taylor.) Among the problems that arise from this lacuna of information is that even the administration was unable to examine the plaintiffs’ purported issues with the program. In that same November filing, the Department of Justice stated its hope that a discovery process would address “the tension between Plaintiffs’ position that the forgiveness program should be expanded to include them and their position that the program is unlawfully overbroad.” “Tension” here being, perhaps, a genteel synonym for bullshit. The Supreme Court justices pulled at this as well, pointing out to the Texas plaintiffs’ attorney, J. Michael Connolly, that dismantling the program was unlikely to get the plaintiffs the debt relief they claimed to want. Connolly answered that they hoped the president would simply re-create the program under another regulatory process, an explanation that is on its face utterly ludicrous.
Up against the dearth of information in the filings and the plaintiffs’ self-imposed firewall, I sought out information on them from alternate sources. I cold-emailed former and current employees of Myra Brown’s business via LinkedIn, to no avail. I undertook a similar process for Alexander Taylor, contacting students and colleagues at his undergraduate alma mater, the University of Dallas, where Taylor is now a doctoral candidate in literature. Somewhat desperately, I even hired a Dallas-based private investigator to visit the High Value Signs storefront and ask after Myra Brown. He reported back that Brown was said to be present but unavailable. A sign on the door stated that she was not taking any interviews at this time.
The plaintiffs’ reluctance to talk makes some sense given the onslaught of attention, much of it disapproving, that they’ve faced in the months since they filed their suit. And Taylor already has some experience with courting controversy. In 2020, he emerged as a leading opponent of a racial justice club on campus. (University of Dallas, notably, is a Roman Catholic institution that boasts its conservative bona fides.) Taylor, who was identified in an Inside Higher Ed article as Indian American, suggested that the club could lead to a “takeover of campus by … hostile student activists.”
Joshua Nunn, a creator of the club, told me that, when his proposal had come before the student government, Taylor, who had been permitted to attend the meeting—though as a graduate student he was not technically governed by the student senate—raised objections over its language, with the aim of tabling the proposal. (He took particular issue with its use of the phrase “safe space.”)
Eventually, the university president, along with the bishop of the Catholic Diocese of Dallas, intervened to pass the proposal over the authority of the student government. It quickly became among the most popular clubs on campus.
Nunn told me that the biggest disappointment in the process was that, even though he and Taylor had met once before, when Taylor graded one of Nunn’s papers in the school’s writing lab, Taylor and other vocal opponents never once approached him to talk about their concerns over the club. Of course, that presumes a genuine concern on their part. The more obvious analysis is that Taylor opposed the club on purely political grounds, and opportunistically grasped at any argument likely to undermine it. Joe Scholz, the student body president at the school during the racial justice club debacle, said Taylor’s motivations in the student debt lawsuit were nothing if not suspect. “This may be the most important thing I want to communicate,” Scholz told me: “There should absolutely be no presumption of good faith behind this effort.”
Since joining the student debt lawsuit, Taylor has been the subject of a significantly wider pool of critics. Naysayers made their way to his RateMyProfessor page to lambaste both his teaching style and his stance on student debt forgiveness (and, in one case, to accuse him of eating a student’s lunch). Myra Brown has faced perhaps even more vitriolic critiques. Judging by reviews left for her business, volunteering to be the face of the anti-cancellation movement has not been a boon to her public image. “There are no words to express what a disgusting and vile person you are, Myra Brown. I hope you get what’s coming to you, and more,” wrote one of the more than two dozen commenters who flooded to her company’s Bizapedia page in the days after the court filing. Many saw hypocrisy in Brown’s opposition to the student debt forgiveness program when she had benefited from Covid loan forgiveness under PPP.
So why and how did Brown and Taylor sign up for this abuse? That question brings us to the deeper aims of the pair’s lawsuit—and to the Job Creators Network Foundation, the murky group backed by billionaires that is funding it. Somehow, both Brown and Taylor were in contact with the Job Creators, whose mission is to amplify “the benefits of free market policies … as well as the consequences of over taxation, overregulation, and government overreach.” The JCNF, which supposedly exists to support small businesses and began seeking plaintiffs to challenge Biden’s program almost immediately after it was announced, was founded by Bernie Marcus, the billionaire conservative co-founder of Home Depot, and also receives funding from the ultraconservative Mercer Family Foundation. The organization may also have tenuous ties to the court itself. In March, The Washington Post revealed that Justice Thomas’s wife, Ginni Thomas, was leading a conservative organization that in 2019 hosted a presentation by a principal officer of the JCNF, Steven Hantler.
The Job Creators Network Foundation, like Brown and Taylor, is based in the Dallas area. Its headquarters is in an office suite in Addison, Texas, about 15 miles from Myra Brown’s sign store, and just over 10 from the University of Dallas, where Taylor studies and teaches. JCNF’s CEO, Alfredo Ortiz, is a former marketing consultant whose book, The Real Race Revolutionaries, was put out in January by a fringe conservative publisher. Its central thesis: “These days in America, racism is sporadic, not systemic.”
It is not exactly clear how Brown and Taylor found their way to the JCNF, nor what motivated them to participate in such a consequential lawsuit. In September, the Job Creators Network posted a form on its website seeking those who found debt forgiveness “unfair,” presumably to recruit them as plaintiffs for its challenge to the program. But the form may not have been a very useful tool. Shortly after it went up, a computer science student at the University of North Carolina at Charlotte, Sean Wiggs, decided to make it his next project. Wiggs had made something of a name for himself on TikTok for sabotaging the website forms of various conservative campaigns, starting with an anti-abortion group in Texas in 2021. Not long after that, he began working as a digital strategist for the progressive activist group Gen-Z for Change. After the JCNF posted its form, another progressive group, Rise, came to him to request his particular brand of sabotage. He quickly created a bot to submit false information to the form. After two days, the JCNF took down the form, which had already solicited 120,000 fake respondents.
Ostensibly the JCNF is against debt cancellation because it is “unfair” to taxpayers, even though the group’s backers have been revealed to benefit from offshore tax shelters that hurt everyday citizens. Moreover, the JCNF itself was the beneficiary of a canceled PPP loan in the amount of $135,000. In court, the plaintiffs’ lawyer argued a different fairness point: that the existence of cancellation is unfair to those who don’t receive it. Justice Jackson was having none of it. “As a result of Covid, we had massive infusions of money given to various companies, organizations, clearly authorized because Congress said do it,” she countered. “To the extent that the government is providing much-needed assistance to people in an emergency, it’s going to be unfair to those who don’t get the same benefit.” Justice Sonia Sotomayor made the point more succinctly, in a formulation familiar to anyone who has ever been a child: “There’s inherent unfairness in society.”
In the wake of oral arguments, the JCNF’s president, Elaine Parker, pivoted, issuing a statement claiming that the JCNF’s real aim was to “hold colleges accountable for their price gouging of American students”—a goal rather at odds with Brown and Taylor’s supposed desire for Biden to expand the forgiveness program. More plausibly, the JCNF opposes student loan cancellation because it threatens the workforce upon which companies like Home Depot rely. The premise of Biden’s plan is that it will help Black and low-earning Americans who are most harmed by student debt, and scholarly research backs this up. Pell Grant recipients are more likely to fall behind on their loans, and Black borrowers are twice as likely as white borrowers to have received Pell Grants and have more debt and lower incomes on average. But the elimination of crippling monthly debt payments may also give its most vulnerable beneficiaries the breathing room to be more choosy about their employment and less eager to accept work in exploitative low-wage environments.
Where Brown and Taylor stand for the (billionaire-backed) borrower, the plaintiffs in the second case marshal the cynicism of the upstanding red state, just trying to balance its budget on the backs of its citizens. That challenge is arguably the more consequential for student debt. In September, officials in six Republican-governed states filed suit against the forgiveness program, initially claiming standing under a fairly cynical rationale. Federal borrowers in an income-based repayment program typically face a 20-year repayment term, with the remaining amount subsequently forgiven. The IRS usually considers forgiven debt as income, subject to both state and federal taxes. But the debt forgiven under Biden’s program will not be subject to taxation. And so, the states argued, they would be harmed because they’d miss out on the taxes they would have been able to levy when the debts were eventually forgiven several years from now. When a federal judge summarily dismissed that argument (after Biden’s lawyer pointed out that, while the forgiven debts will be exempt from federal taxes, the states remain free to levy their own), the states doubled down on an even more convoluted part of their argument. They next claimed that even if five of the six of them did not reasonably have standing, one among them—Missouri—did, because the forgiveness program would render a Missouri company unable to repay its debts to the state.
The Higher Education Loan Authority of the State of Missouri, or MOHELA, was created by the Missouri government in 1981 to make low-cost loans to state residents. At the time, most federal student loans were made by private lenders. Borrowers would repay the loans to their bank, and if they stopped paying, the government would make the banks whole. In some cases, the government delegated that role to state agencies, like MOHELA. In 2010, the Obama administration did away with this bank-based system, bringing most federal student loans in-house. But it kept a role for agencies like MOHELA to continue servicing federal loans—collecting money and performing admin duties. MOHELA receives billions of dollars a year for the loans it services for the federal government. And this, the Republican state officials argue, is what is at risk if the forgiveness program goes through.
The officials claim that, under the forgiveness program, MOHELA will lose money because its loan portfolio will shrink as loans are canceled. As a result, the company will be unable to pay into a state fund, the Lewis and Clark Discovery Fund, or LCD Fund, to which it owes more than $100 million.
There are just two problems with this argument: One, the state officials have no basis for claiming that MOHELA will lose revenue due to the forgiveness program. They merely state it as fact, and there are reasons to believe this might not be the case. And even if MOHELA did lose revenue, it might choose to cut costs or reduce overhead before defaulting on its debts. Moreover, MOHELA itself is not a party to the lawsuit and has publicly distanced itself from the state officials. In October, Missouri Representative Cori Bush pushed the agency to clarify its position, railing in a letter to MOHELA’s CEO, Scott Giles, that it would be “unconscionable that your company—as one of the largest student loan companies in the world—would be involved in overtly political efforts to rob millions of their right to student loan debt relief.” The agency replied that its executives were not involved in the decision to file suit, and that the only communication the two parties had shared over debt relief was when MOHELA released documents to the Missouri attorney general’s office in response to a public records request.
But even if the forgiveness program does reduce MOHELA’s willingness to pay back Missouri, it shouldn’t really be a big deal, as Louise Seamster, a sociologist at the University of Iowa who studies student debt, discovered one morning while bored and in a mood to unravel dubious state records. As it turns out, she found, MOHELA hasn’t paid a penny into the LCD Fund in 15 years.
The state officials seem unfazed by these demerits. “No statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed,” their complaint states. In court, they’ve gone even further. “The federal government is engaged in a so-far hidden, ever-changing and increasingly crumbling escapade of lawlessness,” argued a lawyer from the Nebraska attorney general’s office in a lower court hearing.
Before the Supreme Court hearing, the flimsiness of the plaintiffs’ complaints meant that most borrower advocates were bullish on the strength of the Justice Department’s case. In support of the government’s defense, more than 70 organizations signed amicus briefs filed by a coalition that includes the Student Borrower Protection Center, the National Consumer Law Center, and the American Federation of Teachers. Mike Pierce, executive director of the SBPC, told me that, in leaning so hard on the question of standing, the government was giving a kind of “out” to conservative justices to rule in the administration’s favor. Because if the justices were to rule that these plaintiffs—and particularly the state officials—have standing to sue, they could open the door for anyone to sue over a contested federal policy if they could argue that someone, anyone, might be financially harmed by it.
For the judiciary, that could be—or should be—a nightmare.
Imagine, for example, a scenario in which a controversial climate policy harmed an oil company in a state; alleging that the policy broke some law or was the result of executive overreach, the state could then sue, arguing that harm to the company would reduce its tax revenue. This, legal advocates told me, is not a particularly outlandish thought experiment. If “we find that even the most minor state interest, a dormant fund that hasn’t been funded or used by the state in 15 years,” Justice Jackson warned, “if that can be the basis for standing … I’m concerned that we’re going to have a problem in terms of the federal government’s ability to operate.”
For now, that’s a concern that seems only to contort observers on the left. But there will most certainly be cases in the future in which the conservatives on the court will not want to grant such a capacious reading of standing. (In fact, the legal scholar Steve Vladeck has noted that since the 1970s it has been court conservatives, not liberals, who have sought to restrict standing claims, rejecting them, for instance, in citizens’ challenges to state surveillance programs.) This eventuality presents—or, again, should present—a quandary. Will the justices simply selectively ignore their previous ruling whenever they come across a case they don’t want to hear? That, said Jeffrey Dubner, the deputy legal director of the advocacy group Democracy Forward, which submitted an amicus brief in this case, would be a deeply troubling reshaping of the judiciary’s role as nonpartisan arbiter. “Standing is supposed to be a neutral procedural rule,” Dubner explained. “If judges exempt ideological plaintiffs from neutral procedural rules when they agree with their ideology, then, in a very significant way, we no longer have rule of law. We have courts that apply one set of rules for people they agree with and one set of rules for people they don’t.”
One way around such a consequential outcome would be to thread so narrow a needle toward standing in this case that the justices don’t have to completely reimagine standing doctrine and thereby upend our whole understanding of judicial neutrality. Perhaps the most obvious way for them to do so would be to rule that MOHELA is indeed an arm of the state of Missouri, and therefore any injury to it represents an injury to the state. “Factually,” Dubner told me, that would be incorrect, “for all the reasons that the government explained both at the argument and in its brief”—among other things, it would go against previous cases in which the court has held that such loan servicers are legally independent; and even so, because there has been no fact-finding in this case, the plaintiffs have not even shown that MOHELA is in fact likely to suffer financial harm from Biden’s program. “But it would be incorrect on very specific facts rather than a striking new change to standing doctrine more generally.”
In other words, it wouldn’t wholly undo our basic understanding of what the third branch of government was created to do.
A number of the borrower advocates and legal experts I spoke to worried that, with a majority of the justices essentially in the pocket of the Republican Party, they would jump at the chance to deal the administration a blow on debt cancellation regardless of the weakness of the plaintiffs’ complaints or the possibly nightmarish consequences of recognizing that the cases have standing. And many spectators of the court’s oral arguments suggested that the focus by the conservative justices (particularly Thomas, Roberts, and Alito) on the cost of the program and the meaning of specific words in the HEROES Act indicates they are indeed looking for any possible entry point to strike a blow to the administration. If they do, many more questions will remain unresolved after their ruling. The strange tangle of issues at odds in these cases unsettles our usual certainties about the very nature of debt. Who owes on debts and who gets forgiven—and for which debts?
And in a way, the cases demonstrate the convolution of the student loan program itself—built over decades with layers upon layers of invested parties, their interests intersecting, overlapping, and canceling one another out. The very fact that more than $400 billion is at stake in this targeted cancellation policy is an indictment of the loan program writ large, which has metastasized far beyond its original intent.
Ironically, Myra Brown’s case actually highlights a very good point: The holders of loans under the older, bank-based program really have been screwed. Through no fault of their own, many have been left out of a variety of protections offered under direct federal loans since 2010, including generous repayment programs and cancellation statutes, public service loan forgiveness, and now Biden’s forgiveness program. (Biden’s Education Department, it should be noted, has recently made a series of changes to the loan program to expand services and protections to these borrowers.) And the only reason Brown’s loans were excluded from Biden’s program in the first place was to avoid giving standing to yet another entity. Forgiving Brown’s loans would, after all, create a harmed party—the lenders who hold them.
And borrower advocates like the organizers in the Debt Collective would argue that even Alexander Taylor has a point—they would say he should have his entire debt canceled, that the debt itself is illegitimate, since the government should provide higher education as a right to all citizens, regardless of income status.
The state of Missouri owes services to its citizens as well—services like the educational facilities it was supposed to provide via the moneys in the Lewis and Clark Discovery Fund. A January news report on the fund showed that several of its major projects remain unfunded and incomplete. If the state does not consider itself beholden to its own citizens, how can it expect a higher level of respect from the citizens of the country?
One thing Persis Yu, counsel for the Student Borrower Protection Center, told me was that the states’ various claims of potential harm present a particularly twisted vision of governance. On one side of the scale sit the private corporations these six states harbor, and whose business they court; on the other are their own citizens—thousands if not millions of the very people the lawmakers were elected to represent. Research shows, Yu reminded me, that if these people receive debt cancellation, they will have money freed up to invest in their communities and will be more willing to seek out better jobs or to start their own businesses. That benefits their states both abstractly and monetarily. And these benefits would redound to the states immediately, unlike the supposed tax penalties they may or may not receive when their citizens’ debts are theoretically forgiven in 15 or 20 years, to say nothing of the income from loan servicers who have not paid on their own debts in more than a decade.
If the program falls, the administration could theoretically extend the payment pause, but it has said it will resume payments, come what may, no later than this summer. In any event, less than a week after oral arguments, the financial services company SoFi, apparently anticipating that the court would strike down the forgiveness program, filed its own suit against the government, arguing that the pause itself was illegal on the same grounds. SoFi’s claim for standing? The pause, it argued, which has suspended regular payments and interest accrual, has taken away potential customers to entice into its private-loan refinancing programs.
Most advocates and a number of legal scholars believe that Biden has the authority to cancel student debt independent of the HEROES Act. The Higher Education Act of 1965 includes a clause that says the secretary of education has the right to compromise on, waive, or modify any student loan debt. Point-blank. So if the Supreme Court strikes down Biden’s program, will he let himself be cowed by the judiciary? Or will he openly flout the court and reissue his order under the broader authority of the HEA, almost certainly provoking even more lawsuits? That avenue, unlike the HEROES Act, would require a series of regulatory procedures (such as a mandatory public notice and comment period) that would stretch on for months. And even though the HEA gives “extraordinarily broad ability to cancel debts,” Dubner told me, with this court, that just may not matter.
Even if the court does uphold the program, Congress may find a way to strike it down. In March, Mitt Romney and other Senate Republicans introduced a resolution to apply an infrequently used piece of legislation called the Congressional Review Act, which allows Congress to overturn regulatory policy, to undo Biden’s plan. If the resolution were to pass, it would still require a two-thirds majority in both houses—unlikely, given the current makeup of the two chambers. But the move shows that Republicans opposed to debt relief are leaving no stone unturned in their quest to crush the program.
In the meantime, it’s the borrowers who will suffer. The Student Borrower Protection Center noted in its amicus brief to the court that the government has enacted payment pauses for student loan borrowers affected by other kinds of emergencies—such as natural disasters like Hurricanes Harvey and Irma. As Solicitor General Elizabeth Prelogar noted, default rates typically spike twentyfold when payments resume. Because the scale in this instance is so vast—affecting all borrowers—the organization predicts that “absent relief comparable to the kinds that the government provided to other entities” (ahem, Myra Brown), “these borrowers will likely default on a scale unmatched in the history of the student loan system.” Meanwhile, the Biden cancellation program would eliminate the debt of between 45 and 69 percent of those already struggling to repay their loans. “The real concrete tragedy here,” Dubner told me, “is that millions of borrowers will be at a severe risk of default if this gets wiped away—and that because six attorneys general and two individuals didn’t want it, millions upon millions of people will lose that relief.”