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In the 2023 Supreme Court session, the Justices considered a federal student loan forgiveness plan in Biden v. Nebraska, 600 U.S. ___ (2023). The case centered on whether the Secretary of Education (Secretary) had jurisdiction under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) to depart from the provisions of Title IV of the Higher Education Act of 1965 (HEA) and create a student loan forgiveness plan that would cancel $430 billion in federal debt principal. Title IV of the HEA controls federal financial aid systems, including student loans. Section 2, Subsection 1 of the HEROES Act provides that the Secretary may “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under Title IV of the [HEA] as the Secretary deems necessary in connection with a war or other military operation or national emergency.”
On March 20, 2020, a week after President Joseph R. Biden declared the COVID-19 pandemic a national emergency, then-Secretary Betsey DeVos declared that loan repayments and interest accrual for federal student loans were suspended for sixty days as a result of the crisis. The extra time to pay back loans and the extra interest charges were postponed again because of the pandemic before the first postponement ended. On August 24, 2022, Secretary Miguel Cardona announced a plan to assist federal borrowers with their student debt as per President Biden’s campaign promise to cancel up to $10,000 of federal student loan debt for every federal borrower. The plan would have reduced or eliminated $430 billion in debt principal, affecting nearly all federal borrowers. Six states—Nebraska, Arkansas, Iowa, South Carolina, Kansas, and Missouri—challenged this plan. They argued that it exceeded the authority of the Secretary under the HEROES Act and that the COVID-19 pandemic was used as an excuse to invoke the plan. The states further asserted that the plan would cause financial duress to them, including a loss of profits for companies that provide federal loans.
On June 30, 2023, the Court agreed with the challenging states in a 6-3 decision and struck down the plan. In the majority opinion, Chief Justice John Roberts stated, “Six states sued arguing that the HEROES Act does not authorize the loan cancellation plan. We agree.” Roberts began his opinion with the context of the HEA, the HEROES Act, and the Secretary’s history of involvement with student loan cancellation. The Court first declared that Missouri has jurisdiction to challenge the provision; the plan would cost the Missouri Higher Education Loan Authority (MOHELA) (a nonprofit corporation created by the Missouri government to allow the state to participate in the student loan market) approximately $44 million a year in fees. Harm to MOEHLA would constitute harm to Missouri itself, giving the state a ‘personal stake in the case’ under Article III, Section 2, Clause 1 of the Constitution and jurisdiction to challenge the statute. There is also the precedent of Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561, which declared that the plaintiff has to have suffered an actual or imminent injury to have jurisdiction to sue.
Justice Roberts’ opinion declared that the cancellation of $430 billion in debt was not authorized under the HEROES Act, thus making the plan unlawful. The Court maintained that under the Act, the Secretary’s power to modify loan payback does not allow for fundamental changes to the original framework. Citing various dictionaries, Justice Roberts found that the term ‘modify’ carries a connotation of a limitation or minor change. This is a quite narrow and restrictive interpretation of this phrasing. With this finding, the Court asserted that the Secretary’s power to waive did not resemble past modification under this power, and therefore the sweeping cancellation of $430 billion in debt did not fall in the scope of this power. Concerning the Secretary’s argument that their power to “‘waive’ legal provisions” granted them broader powers, Roberts again referred to prior work of the position and the fact that the Secretary did not waive any specific provision. He argued that since no specific provision in the HEA establishes the obligation of borrowers to pay their loans back, the “waiver” power in the HEROES Act does not apply to waiving loan balances or the obligation to repay. Furthermore, Justice Roberts addressed the argument that the HEROES Act allows the secretary to publish notices in the Federal Register, which includes terms and conditions instead of the modified and waived statutory and regulatory provisions. Justice Roberts argued that this did not grant the Secretary the ability to draft new provisions at will, and instead, created an obligation to report modifications and waivers. Moreover, the federal government contended in its argument to the Court that the purpose of the HEROES Act is to allow the Secretary to “do something” in the face of a national emergency that causes financial duress to borrowers. However, Justice Roberts asserted that the question was “not whether something should be done [but] instead who has the authority to do it.” Referencing West Virginia v. EPA 597 U.S. ___ (2022), Justice Roberts maintained his decision that ruling this large amount of loan cancellation did not fall under the jurisdiction of the Secretary under the HEROES Act. Justice Roberts’ opinion took a very restrictive approach to the idea of complete debt relief. In a country where student debt is suffocating those who bear it, Justice Roberts nonetheless took a very textualist approach to this matter, dismissing the Secretary’s ability of widespread forgiveness.
Justice Elena Kagan issued a powerful dissent, with Justices Sonia Sotomayor and Katanji Brown Jackson joining. In her dissent, Justice Kagan began by declaring, “In every respect, the Court today exceeds its proper, limited role in our nation’s governance,” setting the tone for her dissent which focused on dispelling the Court’s jurisdiction on this case. She wrote that this case should not have been decided at all as there was no injury suffered by the states who challenged the plan, notably arguing that possible harm to MOHELA would not affect Missouri because MOHELA is set up as a “body corporate” with a “separate legal personality” under the law and therefore, distinct from the state. Justice Kagan argued that instead of the plaintiffs being concerned over harm to their state, they simply opposed the policy. She argued that the Secretary had full authority under the HEROES Act to enact the loan forgiveness plan, as there is broad authority in this statute to create emergency relief for student loan borrowers. She further argued that the Court exceeded its power with this decision, and “substitute[d] itself for Congress and the Executive Branch in making national policy about student-loan forgiveness.” While this wasn’t the opinion of the majority, dissents often carry great weight in future rulings and changes of precedents. Kagan’s address of the justices’ distaste for the plan and the lack of jurisdiction the Court has on this matter are powerful statements and could be referenced later if the Court addressed another case along these lines.
Following this ruling, on October 4, 2023, the Biden administration announced a new student debt relief plan. The relief plan would assist 125,000 Americans with $9 billion in loan forgiveness and would be based on the powers of the Secretary found in the HEA. At the moment, it is unclear who will be eligible for relief and how much under this plan. The HEA gives the Secretary jurisdiction to waive student loans, however, the extent of that authority is up for debate. The Department of Education wishes to settle this concern by adding rules that clarify the Secretary’s waiving power; to do this, the Department is required to create a committee of outside negotiators to figure out the details. Negotiations have been divided into three sections which took place on October 10-11, 2023, November 6-7, 2023, and December 11-12, 2023. The committee for these negotiations includes students, loan servicers, state officials, representatives from institutions of higher education, as well as a negotiator from the Department of Education. This issue is set to remain open for more time, but government officials have said that they are not considering giving the Secretary the authority of blanket cancellation. After the sessions end, negotiators will vote on a proposed rule drafted with input from their discussions. If there is a consensus, the Department will move forward with the rule; if not, the Department will create a plan that will be finalized after a public comment period. As of now, the committee’s talks have concluded, and transcripts and recordings from the meetings can be found here. There has been no official statement or proposal released as of yet.
Biden v. Nebraska and the subsequent new proposals for debt relief display the student debt problem that currently exists in our nation. Many have to weigh the costs and benefits of getting an education and often go into immense debt to achieve a degree. In a society where having at least an undergraduate degree is sometimes the key to prosperity, it can be unfathomably hard for some to scrape together the funds for an education. While blanket cancellation is not on the table, this committee could propose a widespread relief plan and similarly help borrowers. However, the committee could also take relief off the table altogether, or only offer it to few. While Biden v. Nebraska paints a gloomy picture of the future of debt cancellation, there is still hope. With the powerful dissent authored by Justice Kagan and the hard work the Biden administration is putting in to find other routes to relieve debt, the future of at least partial relief looks bright. The future of federal student debt cancellation remains uncertain, and regardless of the outcome of these committees and new proposals, millions of students and borrowers will be affected.