The US Department of Justice (DOJ) Wednesday filed an 86-page brief with the Supreme Court in response to two cases against President Joe Biden’s student loan forgiveness plan: Joseph Biden v. State of Nebraska and Department of Education v. Myra Brown.
The brief agrees with a district court’s holding in Nebraska that the States challenging the plan do not have standing. In response to Brown, the DOJ agrees with the district court’s holding requiring only “notice” but argues that, to establish Article III standing, the student-petitioners must show their injury would “likely be redressed by the requested relief.” In this case, holding the plan unlawful would not benefit them anyway.
On the merits, the DOJ argues that the plan is within the Department of Education’s (DOE) authority, is reasonable and is procedurally proper. Since the Secretary of Education found from substantial economic data that loan default would increase beyond pre-pandemic levels, the plan would not place borrowers “in a better position,” as the States argued, but would only ensure they are no worse off. The brief also cites the recent case of West Virginia v. EPA to argue that the “major questions” doctrine only applies in cases where there is a “gross mismatch” between the action and the history and context of the authorization.
In Nebraska, the States of Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina claimed the plan would deprive them of their tax revenue. The district court dismissed the suit for lack of Article III standing, stating they could independently alter their tax policies. The court also denied Missouri standing on the grounds that a state-created nonprofit servicing student loans would be affected, saying the nonprofit was independent. The US Court of Appeals for the Eighth Circuit issued an injunction against the plan pending appeal.
Meanwhile, the petitioners in Brown, students seeking broader debt relief, claim DOE promulgated the plan improperly since it did not provide stakeholders the opportunity to “comment” and urge broader relief. The district court agreed they have standing, rejected their claim on procedural impropriety — stating the Secretary need provide only “notice” and not “comment” — but held the plan substantively unlawful for not satisfying the major questions doctrine.
The Higher Education Relief Opportunities for Students (HEROES) Act allows the Secretary to provide debt relief in connection with national emergencies. In March 2020, soon after a national emergency had been declared in light of the COVID-19 pandemic, the Secretary invoked the HEROES Act to pause repayment obligations on all such loans. In August 2022, the Secretary sought to stop the pause on December 31, 2022 but forgave $10,000 in student debt of borrowers with an annual income under $125,000.
The plan is a step toward realizing Biden’s campaign promise to “forgive all undergraduate tuition-related federal student debt” for those earning up to $125,000, in addition to “immediately canceling $10,000 of student debt per person” as COVID-19 relief. According to the White House, nearly 90 percent of the benefits will go to borrowers with an annual income below $75,000. The Secretary of Education has extended the pause on federal student loan payments until 60 days after the Supreme Court ruling, which is due at the end of June.