". . . and having done all . . . stand firm." Eph. 6:13


Supreme Court Skeptical During Student Loan Bailout Hearing

March 1, 2023

The Supreme Court on Tuesday heard oral arguments on two cases challenging President Biden’s plan to cancel up to $20,000 in outstanding student loans for millions of former students. In the first case, Biden v. Nebraska, six states (Missouri, Nebraska, Iowa, Arkansas, Kansas, and South Carolina) challenged the Biden administration’s authority to issue a $500 billion loan bailout without congressional approval. In the second case, Board of Education v. Brown, private parties excluded from the sweeping benefits challenged the statutory and procedural basis of the loan forgiveness.

“The problem we have here is one of essentially separation of powers. Nothing authorizes the president, unilaterally, the power of the purse,” said Missouri Attorney General Andrew Bailey (R) on “Washington Watch.” “Congress has to have that authority, not the president.”

In fact, “President Biden knows this is unconstitutional and illegal,” added Bailey. Biden “worked to get a bill through Congress and failed to do so — when his party controlled majorities in both the Senate and the House.” Bailey added that “his failure to do so led him to then turn to unelected federal bureaucrats.”

“This is about protecting the Constitution and the working people of the state of Missouri,” said Bailey, “but it’s a statutory issue as well.” That’s because the Biden administration is claiming statutory authority for his massive student loan bailout under the HEROES Act of 2003, which Bailey compared to “hiding an elephant in a mouse hole.”

Under the Higher Education Relief Opportunities for Students (HEROES) Act, the Secretary of Education may “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” when “necessary in connection with a war or other military operation or national emergency.” But this “was actually intended for veterans in the War on Terror to not have to have stiffer penalties for their failure to pay back student loans during their service,” said Bailey, not to provide the administration with a way to sidestep Congress and forgive student debt in half-trillion dollar chunks.

“It is a policy matter,” Bailey insisted. “And, look, that’s the whole point. Policy decisions need to be left to the Congress, the people’s elected representatives. We need to draw the distinction.” He added, “If President Biden wants to pay off other people’s student loan debt, then he needs a bill through Congress so that we can have fair and open debate.”

“And I think that the court pretty quickly latched on to that,” said Bailey. “I think the conservative justices showed skepticism about the merits of the [administration’s] case.”

In the past two years alone, the Supreme Court has struck down three different major policy actions by the Biden administration which it said violated the “major questions” doctrine (the eviction moratorium in 2021, the employer vaccine mandate in 2022, and a carbon emissions cap in 2022). All three decisions were decided by a 6-3 majority. The court may decide that the major questions doctrine, which holds that the administration may not decide major policy questions without clear direction from Congress, is also relevant to Biden’s student loan bailout.

Chief Justice John Roberts, in particular, whose vote the Biden administration would likely need to win the suit, suggested that Biden’s loan forgiveness order “modified” student loans in the same way that the French Revolution “modified” the status of French aristocrats, quoting the late Justice Scalia. Roberts wrote at least two out of three of the court’s recent major questions cases.

Justice Sonia Sotomayor disagreed, “There’s 50 million students who are — who will benefit from this. Who today will struggle. Many of them don’t have assets sufficient to bail them out after the pandemic. They don’t have friends or families or others who can help them make these payments.”

Family Research Council President Tony Perkins responded to Sotomayor’s argument, “Is that really a question for the court? I mean, that sounds like a policy matter.” And when it was considered in the proper forum for policy matters, Biden’s student loan bailout scheme failed to win the approval of Congress.

That’s because the viewpoint of those with student debt is not the only one to consider. “As someone who paid for my school in blood, sweat, and tears, and service to my nation, there’s nothing free,” Bailey warned. “Somebody’s going to pay that. It’s put on the shoulders of the working people in the state of Missouri who didn’t take out loans to go to college and made those tough decisions.” Perkins added, “If you do it this time, you’re going to find another occasion to do it yet again. And with $32 trillion in debt, we really can’t afford it.”

Bailey suggested that President Biden took the risky gamble to unilaterally forgive student loans because of a campaign promise to young leftists. “President Biden campaigned on a promise to eliminate student loan debt in the United States of America,” he said. Unable to move the proposal through a thinly divided Congress, this was Biden’s only option to satisfy a key constituency.

“The students are about to get an addendum to their education,” offered Perkins. “It’s going to be their first bait-and-switch because this came right before the election, I think as an enticement to young people to support President Biden and the Democratic Party. And they’re going to find out that they were promised something that they’re not going to get.”

The outcome of the case is by no means guaranteed. The less certain aspect of the case is whether any party, including the states, has the proper standing to sue. Having learned from their recent losses, the Biden administration tried to carefully construct the student loan bailout in such a way that no one could claim legal standing to sue.

Perkins wondered how government abuse could be checked if no one had standing to sue. “If they were to say that you don’t have standing, but who would have standing?” Bailey agreed. “At the end of the day, someone has to be able to challenge the constitutionality of President Biden’s violation of separation of powers. And who better than states? Especially when I can show concrete harm to the state of Missouri.”

Missouri arguably has the strongest grounds to sue of any state because of the Missouri Higher Education Loan Authority (MOHELA), an entity that holds and manages thousands of federally issued student loans. MOHELA is “a creature of statute,” argued Bailey, created in 1981 by the Missouri General Assembly. “They owe money to the state in the Lewis and Clark Discovery Fund that’s used to pay for capital improvements and higher education facilities. And they also fund scholarships. So, there’s direct, concrete harm to the state of Missouri if those student loan repayments to Mahela are canceled by President Biden’s plan.” The Court of Appeals for the Eighth Circuit ruled in October that Missouri “likely has legal standing to bring its claim” because of its relationship with MOHELA.

But this argument didn’t necessarily convince all the justices on the Supreme Court. Justice Amy Coney Barrett asked why Missouri, and not MOHELA, had sued the Biden administration. Did MOHELA not want to participate? “They didn’t need to be there because I was there for them. I mean, they’re an entity of the state,” Bailey said on “Washington Watch.” “They can only do what they’re authorized to do by the General Assembly, and I represent the state of Missouri.”

For his part, Baily projected confidence. “I like where we are in the suit,” he said. “I think that it’s significant that Chief Justice John Roberts didn’t latch on to the standing issue.”

The Supreme Court scheduled oral arguments on an expedited basis, and Bailey expects a decision in the case “no later than June.”

Joshua Arnold is a staff writer at The Washington Stand.