Supreme Court Strikes Down Student Loan Forgiveness Scheme
The Supreme Court on Friday struck down the Biden administration’s attempt “to cancel $430 billion of student loan principal” under a 9/11-era law (the HEROES Act) that authorizes the Secretary of Education to “waive or modify” provisions in response to a national emergency. In a 6-3 opinion penned by Chief Justice John Roberts, the court held that the authority to “waive or modify provisions” of the HEROES Act did not authorize the secretary “to rewrite that statute from the ground up.”
Continuing a recent trend, the court reached its decision by reading the statute and applying the ordinary meaning of the words it contains. Where that meaning was disputed, it consulted dictionaries. “Statutory permission to ‘modify’ does not authorize ‘basic and fundamental changes in the scheme’ designed by Congress,” reasoned the court. “Instead, that term carries ‘a connotation of increment or limitation,’ and must be read to mean ‘to change moderately or in minor fashion.’ Ibid. That is how the word is ordinarily used. See, e.g., Webster’s Third New International Dictionary 1952 (2002).”
“From a few narrowly delineated situations specified by Congress, the Secretary has expanded forgiveness to nearly every borrower in the country,” said the court. “Labeling the Secretary’s plan a mere ‘modification’ does not lessen its effect, which is in essence to allow the Secretary unfettered discretion to cancel student loans.”
Nor does the authority to “waive” provisions apply, because “the Secretary’s invocation of the waiver power here does not remotely resemble how it has been used on prior occasions,” the court continued. Additionally, “the Secretary does not identify any provision that he is actually waiving. … What the Secretary has actually done is draft a new section of the Education Act from scratch by ‘waiving’ provisions root and branch and then filling the empty space with radically new text.”
The court described the government’s arguments in defense of the scheme as “sleight of hand” meant to “elide the statutory text.” According to the government’s interpretation of the law, said the court, “the Secretary would enjoy virtually unlimited power to rewrite the Education Act.”
To reinforce its statutory interpretation, the court invoked its recent decisions in cases involving the Major Questions doctrine, in which the court held that executive agencies may not decide major questions of policy and law unilaterally, without “clear congressional authorization.” “The question here is not whether something should be done; it is who has the authority to do it,” they wrote. “The Secretary of Education claims the authority, on his own, to release 43 million borrowers from their obligations to repay $430 billion in student loans.” But, they held, “the HEROES Act provides no authorization for the Secretary’s plan even when examined using the ordinary tools of statutory interpretation — let alone ‘clear congressional authorization’ for such a program.”
Justice Elena Kagan’s dissent, in which Justices Sonia Sotomayor and Ketanji Brown Jackson joined, called the major questions doctrine “made-up.” But the majority responded, “while the major questions ‘label’ may be relatively recent, it refers to ‘an identifiable body of law that has developed over a series of significant cases’ spanning decades.” Justice Barrett, who joined the majority, also wrote a separate concurring opinion to argue that the major questions doctrine was consistent with textualism.
The court also pointed to recent, widespread agreement that the administration could not unilaterally forgive loans. Its opinion quoted then-House Speaker Nancy Pelosi (D-Calif.) in July 2021, “People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”
In rebuttal, Kagan argued, “in every respect, the Court today exceeds its proper, limited role in our Nation’s governance.” But the court responded, “The dissent is correct that this is a case about one branch of government arrogating to itself power belonging to another. But it is the Executive seizing the power of the Legislature. … Among Congress’s most important authorities is its control of the purse.”
Most court watchers did not expect the Biden administration to prevail on the merits, but they were less certain whether the court would find that any challenger had standing. The court held that “at least Missouri” could demonstrate an actual harm because the decision would cost its state-created student loan servicer MOHELA an annual $44 million in lost fees. “Because we conclude that the Secretary’s plan harms MOHELA and thereby directly injures Missouri — conferring standing on that State — we need not consider the other theories of standing raised by the States,” said the court.
“It is a good thing that the executive branch cannot simply decree new spending and debt commitments,” wrote the National Taxpayers Union. “If we are going to shift around hundreds of billions of dollars in debt, Congress should do it openly and clearly. The power of the purse rests with Congress under our Constitution.”
“Happily, the Court did its job and upheld our framework of government,” wrote National Review’s Charlie Cooke. “Today is a day for rejoicing that it did. Article I is still intact.”
“This is a win on one hand regarding the illegality of ‘forgiving’ the loans as the Biden administration tried to do,” Family Research Council Senior Fellow for Education Studies Meg Kilgannon told The Washington Stand. But she warned the decision could “further radicalize college-educated youth to demand or support changes to the U.S. Supreme Court, which is being painted by Democratic politicians as the enemy of progress.”
It’s not just Democratic politicians, but their media allies as well. The Washington Post’s Jennifer Rubin reacted to the court’s Friday decisions, “when the outcomes at the supreme court perfectly align with rightwing agenda the court is corrupt. it is not a court. it is acting like a MAGA political operator.” The last time a Supreme Court decision did not “perfectly align with [a] rightwing agenda” was on Tuesday, when the court ruled 6-3 against North Carolina GOP lawmakers in Moore v. Harper.
Left-wing groups quickly asserted that Biden can cancel student loan debt in other ways. “Regardless of the ruling, the law is clear: President Biden still has the legal authority to cancel student debt. He must do so right away,” claimed a group called More Perfect Union. The Debt Collective demanded “immediate action from the Biden administration,” while a lawyer with the Student Borrower Protection Center claimed, “There are many tools that the [Education] Secretary can use.”
For his part, President Biden employed hyperbole to assuage the disappointment of his outraged base, calling the decision “unthinkable” and declaring that “the fight isn’t over.” In remarks Friday afternoon, he added that “millions of Americans feel disappointed and angry” over the decision. “We need to find a new way, and we’re moving as fast as we can.”
Biden announced a new plan, which he would “ground” in a different law, the Higher Education Act. “This new path is legally sound. It’s going to take longer, but in my view it’s the best path that remains,” he suggested. He also announced a new, 12-month “on ramp repayment plan.”
These new programs created by the Biden administration may face new legal challenges, as they lack the “clear congressional authorization” required by the Supreme Court.
Joshua Arnold is a staff writer at The Washington Stand.