Nebraska Solicitor General Jim Campbell, who argued on behalf of Republican attorneys general for six states challenging the plan, told the justices that “never before has the Heroes Act been used to forgive a single loan.”
Campbell said that Education Secretary Miguel Cardona’s use of the act to alleviate student loan debt was “breathtaking.”
“He needs clear congressional authorization for such power, which he doesn’t have because the Heroes Act does not authorize this program,” Campbell said. “This court should declare this program unlawful.”
“This is a program that affects 95% of borrowers regardless of how they were affected by the pandemic,” he said.
But Justice Elena Kagan told Campbell that the text of the Heroes Act — which Congress voted to approve — gave the Education secretary expansive authority to forgive debt during an emergency.
“Congress could not have made this much more clear,” said Kagan, one of the court’s three liberal justices.
The second case, filed by two members of the public, says the Biden administration violated federal rules by issuing the debt relief plan without first seeking formal public comment on it.
In both cases, the Department of Justice says the plaintiffs lack legal standing to challenge the program.
The administration has argued that the plaintiffs have failed to demonstrate that they are negatively affected by the plan, which would forgive up to $20,000 in debt per borrower.
And, the two plaintiffs in the second case “cannot go to court to make themselves and everyone else worse off” than they would be if the plan took effect, Prelogar told the justices.
Campbell in his opening argument addressed the question of standing, saying that Missouri’s student loan authority, known by the acronym MOHELA, is “a state-created, state-controlled public entity.”
Missouri is one of the states suing the Biden administration to block the plan.
And its invocation of alleged harm to MOHELA might be the sole reason that the challenge survives the question of standing at the Supreme Court.
Campbell said that MOHELA would lose about 40% of its operating revenue if the debt relief plan went into effect.
But Prelogar argued that MOHELA could actually see a net financial gain from the debt relief plan because of the structure of the program.
Kagan challenged Campbell on whether Missouri has the right to base its suit on claims of harm related to MOHELA, which itself is not a plaintiff in the case.
“Usually we don’t allow someone else to step into another’s shoes,” said Kagan, a member of the court’s three-justice liberal block.
Campbell said, “We don’t deny MOHELA could file a suit like that,” but repeatedly argued that the agency is a creature of the state, and that Missouri was legally empowered to make claims on its behalf.
Justice Amy Coney Barrett later pressed Campbell on the point, asking him why Missouri was in court in the case, as opposed to MOHELA.
“MOHELA’s not here because the state is asserting its interests,” he said.
Sotomayor questioned how Missouri could use MOHELA as the basis for standing in the case, given the state’s arm’s-length relationship to the agency.
“It would be odd for us to have a state say ‘We’re creating a corporation. We’re not going to be responsible for its debts. We’re not going to be responsible for any of its contracts. We’re not going to be responsible for anything it does financially,'” Sotomayor said. “And the state itself says ‘this is not the state, it’s an independent corporation.’ And we’re going to say instead, that it is the state, correct?”
Barrett, who is a conservative, continued, “Why didn’t the state just make MOHELA come here … why didn’t you strong-arm MOHELA?”
Campbell replied, “That is a question of state politics.”
Justice Neil Gorsuch, another conservative, raised a point that many Republicans have made in criticizing the plan, one based on the fairness of forgiving billions of dollars of debt to people who willingly borrowed that money to attend colleges and universities.
“What I think they argue, that is missing, is cost to other persons in terms of fairness, for example, people who’ve paid their loans, people who don’t … have planned their lives around not seeking loans, and people who are not eligible for loans in the first place,” he said.
“And that half a trillion dollars is being diverted to one group of favored persons over others,” Gorsuch said.
But Sotomayor warned against the idea of having the court limit the power to forgive the debt that the Biden administration argues has been explicitly authorized by Congress in the Heroes Act.
“That really has us as the third branch of government, changing Congress’ words because we don’t think we like what’s happening,” Sotomayor said.
“There’s 50 million students who … will benefit from this, who today will struggle,” she said.
“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,” Sotomayor said. “The evidence is clear that many of them will have to default, their financial situation will be even worse because once you default, the hardship on you is exponentially greater.”
“And what you’re saying is, now we’re going to give judges the right to decide how much aid to give them,” she said.
Outside the courthouse, Jamie Pipik, a 20-year-old Akron, Ohio, resident, showed up to support the plan.
Pipik said that having grown up in a wealthy suburb she was fortunate enough not to have to borrow for her education.
But she said she was fighting for the majority of Americans who have no choice but to go into debt if they want to attend college.
“Everyone should have the opportunity to become who they want to become, and canceling student debt would make that more possible,” Pipik said. “I hope they decide to get rid of student debt and lift that weight.”
— Annie Nova reported from Washington, D.C., and Dan Mangan reported from New York.
Article source: https://www.cnbc.com/2023/02/28/biden-student-loan-case-argued-at-supreme-court.html