MO, KS seek to block Biden’s student debt forgiveness. Supreme Court hears case Tuesday

The U.S. Supreme Court on Tuesday will hear oral arguments on whether President Joe Biden’s administration had the authority to erase up to $20,000 of student loan debt for some Americans.

The court’s justices will hear two cases challenging Biden administration’s student loan forgiveness plan, which was unveiled last fall and aimed to forgive up to $10,000 in loans for people who earn less than $125,000 a year and up to $20,000 for borrowers who received Pell Grants, a type of loan available for people who come from low-income families.

More than 16 million Americans had been approved to have all or some of their loans forgiven by the time the program was halted in November, including 305,000 Missourians and 143,000 Kansans. If the Supreme Court sides with Biden, those people would have their loans forgiven within a few weeks.

“It’s a substantial share of individuals who could see a meaningful decrease in their student loans,” said Katharine Meyer, a fellow at the Washington-based Brookings Institution who focuses on education policy. “But depending on this decision, there’s also the question of kind of what precedent does the decision itself set.”

The first case is Biden v. Nebraska, a lawsuit brought by six Republican-leaning states — including Missouri and Kansas — that said Biden’s plan will cost their states money because all of the loans will be paid off at once, affecting their ability to collect interest. The second is Department of Education v. Brown, where two people challenged the program for not having a comment period, arguing that they would have asked the administration to forgive more debt.

Kansas and Missouri joined the suit under previous attorneys general Derek Schmidt, a Kansas Republican who lost his campaign for Kansas governor, and Eric Schmitt, a Missouri Republican who was elected to the U.S. Senate to represent Missouri. But the new GOP attorneys general in both states — Andrew Bailey in Missouri and Kris Kobach in Kansas, have stuck with the case.

The court, where conservatives have a 6-3 majority, will try to determine two things for both cases — were the people affected enough that they can challenge the program (known as legal standing) and whether the Biden administration has the authority to implement his plan.

In the case brought by the states, Missouri probably has the strongest argument, according to Jack Fitzhenry, a senior legal policy analyst at the conservative Heritage Foundation. It has its own state entity that operates as a student loan provider — called MOHELA.

“The servicers will no longer be paid for servicing those losses are going to see a drop in their revenue,” Fitzhenry said. “So that’s going to be as true of Missouri’s state created entity as it is for any of the private loan servicers who are not parties.”

Some of the other states in the suit hold student loans as investments. So if the money is paid off right away, they lose money they would have otherwise received from interest.

The federal government will argue that neither the states, nor the two loan borrowers, have the standing to bring their lawsuits.

Biden’s program hinges on a 9/11 era law called the HEROES Act that allows the Department of Education to make changes to the federal student loan program during national emergencies. The country has been under a national emergency for the COVID-19 pandemic for nearly three years — one that Biden has said will end in May.

“Right now, we just feel very confident,” White House press secretary Karine Jean Pierre said last week. “Look, we have to remember what the student loan plan means and why the President put that forward. It’s to help tens of millions of Americans — give them a little breathing room, give them an opportunity, as we’re coming out of this pandemic.”

Under that emergency order, the administration has already made changes to the federal student loan program — suspending all interest payments since March of 2020. The forgiveness plan would build on that, allowing people to get up to $20,000 of their student loans forgiven under the argument that the pandemic has created a financial burden.

The Supreme Court will likely decide if the Biden administration’s program goes beyond what Congress intended when it passed the HEROES Act. The law originally focused on the military — giving power over some student loan decisions to the executive branch as the country was headed to war in Iraq, but allowed for changes under any national emergency.

Schmitt, the newly elected Republican senator from Missouri, has argued that Biden overstepped his authority by enacting a sweeping program that would cost the federal government around $400 billion over 30 years, according to the Congressional Budget Office.

“The President of the United States simply does not have the authority to unilaterally cancel billions of dollars of student loan debt,” Schmitt said in a written statement. “It’s a complete slap in the face to the people who chose not to take on debt, or worked hard and saved to pay off that debt.”

But while Republicans have portrayed it as a program intended to help well-off Americans, a wide variety of people have taken on student loan debt, including some who never graduated.

“Even to move beyond college graduates, there’s a substantial share of non-college graduates who hold debt,” Meyer said. “Individuals who went to college never achieved a degree because of life circumstances, or what have you resulted in them dropping out of their program, who still have a substantial amount of student loan debt.”