Frank Sottosanto just got a taste of what it would be like to be free of student debt.
Earlier this month, Sottosanto finished paying off his private student loans, which once totaled roughly $30,000 a step he said he could only afford to take because of the pandemic-era freeze on payments, collections and interest on the other portion of his student debt, the $16,900 he owes the federal government.
In the weeks since he got rid of his private loans, Sottosanto, 32, said his mood and stress levels have improved.
“It’s definitely a really good feeling,” to have less debt, he said. “I’m closer to getting to the starting line of my life.”
Before the pandemic-induced payment pause on government student debt, Sottosanto, a water resources engineer, struggled to find money to save for the future after making his student loan payments and covering his Portland, Ore., rent and other bills. If the Biden administration’s plan to cancel up to $20,000 in student debt for a wide swath of borrowers survives its legal challenges, Sottosanto would be truly student debt-free; the government would discharge the $16,900 he still owes in federal student loans. He received a Pell grant, the money the government provides to low-income students to attend college, and qualifies for the full $20,000 of relief.
But if the Supreme Court knocks down the debt cancellation program, Sottosanto said he’ll have to continue to delay his plans to secure the stability he thought would come with a college degree.
“I’d be pretty upset,” if that were the result, Sottosanto said. “I’d have to wait many more years to really start my life and start saving for a home and putting more savings towards retirement and just getting any type of future in terms of being able to retire in a house that you own.”
For millions of borrowers like Sottosanto the outcome of the cases before the court will have a meaningful influence on their financial lives, but, in addition, it could also have lasting legal consequences.
“It raises legal questions that go beyond this case,” David Rubenstein, a professor at Washburn University School of Law, said of the student loan suits. “The stakes are actually quite large,” for borrowers, the Biden Administration and the law more broadly.
Though the court likely won’t issue its decision until June, borrowers and court watchers may get a sense of how the justices are thinking about the two major legal questions at issue in the suits when the attorneys present their oral arguments to the nine Supreme Court justices on Tuesday.
The issue of standing
The first question the court will look to answer is whether the parties have standing, or the right to bring a lawsuit to court. In one case before the justices, which comes out of the federal court in Fort Worth, Texas, a federal judge essentially collapsed the question of whether the plaintiffs had standing with whether the policy was legal and ruled in favor of the borrowers challenging the Biden administration’s policy, saying it was unconstitutional.
That case was brought by two student loan borrowers, who said they objected to the debt relief plan in part because the Department of Education didn’t seek public comment on it. That, they said, deprived these borrowers and other stakeholders from weighing in, resulting in a policy that arbitrarily benefitted some and not others, like themselves.
One of the borrowers, Myra Brown, has more than $17,000 in federal student debt, but doesn’t qualify for debt relief because the Biden administration excluded the type of loan she has from the plan. The other plaintiff, Alexander Taylor, has more than $35,000 in student loans and qualifies for $10,000 in debt cancellation, but he’s not eligible for the maximum amount in debt cancellation under the plan — $20,000 — because he didn’t receive a Pell grant, which is college funding provided to low-income students.
Their suit is backed by the Job Creators Network, an organization launched by Bernard Marcus, the co-founder of Home Depot and a supporter of former President Donald Trump.
Legal experts generally agree that plaintiffs in the other suit before the Supreme Court have a stronger argument for standing. In that case, six Republican-led states sued the Biden administration over its debt-relief policy, saying they’d be harmed by it because it would impact their revenue in various ways. As that case has wound its way through the legal system, courts and legal experts have focused on one of the states’ arguments: that the Higher Education Loan Authority of Missouri, or MOHELA, a state-affiliated student loan organization, would lose revenue if the debt cancellation policy were allowed to take effect and that would financially harm Missouri, one of the plaintiffs in the suit.
A George W. Bush-appointed federal judge dismissed the suit in October, saying the states didn’t have standing to sue. And even some legal experts who believe the Biden administration’s debt relief program is illegal overall, agree that the states don’t have the right to bring the case.
“The requirement for standing for parties is one of the things that helps keep a court acting in a judicial mode,” said Samuel Bray, a professor at the Notre Dame Law School. In order for a party to bring a suit, they must be injured directly by the policy and the court needs to be able to redress the harm, Bray added.
Bray and William Baude, a professor at the University of Chicago Law School, wrote in a friend of the court brief that Missouri and the other states don’t meet that standard. For example, the states have argued that the debt-relief plan could cost MOHELA revenue it receives through servicing federal student loans and that could put the organization at risk of not paying on a debt it owes to Missouri. But, as Bray and Baude’s brief notes, MOHELA hasn’t paid on that debt in years.
“If MOHELA doesn’t want to sue for the injuries to MOHELA then Missouri shouldn’t be able to step in and sue for the injuries for MOHELA,” said Bray, who believes the Biden administration doesn’t have the legal authority to cancel student debt. MOHELA has said it wasn’t involved in the states’ decision to sue over the policy. “If you allow it here, why not allow it in lots of other places?” Bray added, “and that would be a huge change.”
In a 2006 decision about whether states could sue the Environmental Protection Agency for not regulating forcefully enough to prevent climate change, the Supreme Court said states had “special solicitude” in the analysis of whether parties have standing, but it didn’t explain what that meant. That’s created confusion in lower courts, according to Bray. The meaning could range from the idea that states always have standing to the notion that judges should simply give more weight to states’ standing claims than they would other plaintiffs’. Supreme Court Chief Justice John Roberts disagreed with that decision and wrote the dissenting opinion in the case.
“In the lower courts there have been a lot of cases where the courts have allowed these extravagant standing claims and pointed to the language from Massachusetts vs. EPA about special solicitude,” Bray said. “The Supreme Court has not had a good opportunity recently to revisit state standing.”
It’s possible that some of the justices may want to “get creative” in how they decide whether the states have standing, said Christopher Walker, a professor at the University of Michigan School of Law. Roberts is particularly sensitive to situations where it appears the government is playing games with procedural rules, he said. He cited Roberts’ criticism in two cases of Trump administration officials searching for legal justification to take actions that were more about policy or politics.
It’s possible Roberts could see the Biden administration’s decision to exclude borrowers with privately-held federal student loans from the debt-relief plan as similarly trying to enact policy while avoiding judicial review, Walker said. That decision, which was announced on the same day the states brought their lawsuit, neutralized one of the states’ claims. The states had argued that the debt cancellation plan would encourage borrowers with privately-held loans to consolidate their debt into a type of loan that was eligible for the program, which would deprive state-affiliated organizations holding those loans of revenue.
“Could they massage standing doctrine in response to that? Maybe,” Walker said. “It wouldn’t entirely surprise me although I still think it’s a really hard case for them to make.”
If the court were to find that the states have standing to sue in this case, it could mean that every controversial federal policy would be ripe for legal challenge by attorneys general in the opposing political party of the president, Bray said. These cases would have a high likelihood of success at least early on, he said, because attorneys general tend to be good at picking venues for their suits with judges who are sympathetic to their arguments.
“One of the reasons we’ve had such a sense of stalemate for executive action over the last six years is this ability of state attorneys general of the opposite party to stop any major initiative by the president whether it’s a Republican or a Democrat,” Bray said.
If these kinds of cases are regularly allowed to move forward it could raise questions both about the separation of powers between the legislative, executive and judicial branches of government and between state and federal governments, Rubenstein added.
“The states are essentially claiming the mantle of Congress’ intent,” in this case, Rubenstein said. “Now you’re getting the courts involved. Everybody is at the table in terms of all of your major government institutions and they’re all wrapped up.”
The merits of the case
If the court finds that the parties in both cases don’t have standing to sue, then the Biden administration’s debt relief plan would remain in place, at least for now. That’s because a lack of standing means the justices can’t get to the question of whether the program is legal.
If, however, the justices do find the plaintiffs have the right to sue then they can consider the merits of the case or whether the law gives the Biden administration the power to cancel student debt.
The government has said the HEROES Act — a 2003 law meant to protect student loan borrowers from the impacts of natural disasters and national emergencies — authorizes the Secretary of Education to cancel student debt to ensure borrowers aren’t left financially worse off from the pandemic.
The parties challenging the policy have argued that Congress didn’t authorize mass student debt cancellation when it passed the law. As part of their case, they’ve invoked the major-questions doctrine. The legal theory is relatively new, but in previous decisions the Roberts-led Supreme Court has said it means that when executive branch agencies take action with significant political or economic consequences, they’re overreaching unless Congress clearly gave them the authority to enact the policy.
The Biden administration has argued the court’s review of this policy shouldn’t trigger the major-questions doctrine because the threshold only applies to situations where an agency is imposing a burden, not providing a benefit. In addition, they say, the court should only invoke the doctrine in cases where a policy is far outside an agency’s scope, which is not the case here because a core function of the Department of Education’s work is overseeing federal student loans.
“When courts normally engage in statutory interpretation they’re looking for what’s the most likely or what’s the best interpretation,” Rubenstein said. When the major questions doctrine comes into play, the question changes, he added. “You’re not looking for the best interpretation, you’re looking at whether Congress clearly authorized” the agency policy.
That means the court is looking for clear authority when often Congress’s intentions are ambiguous, Rubenstein said. Take the HEROES Act as an example. Former Republican lawmakers, including former Speaker of the House John Boehner, wrote in a friend of the court brief that when Congress passed the law in 2003, it never intended for the law to be used to cancel student debt en masse. At the same time, George Miller, a former Democratic Congressman who co-sponsored the law, wrote in his own friend of the court brief that the HEROES Act gives the Secretary of Education this authority.
If the court strikes down the Biden administration’s debt relief policy because it doesn’t meet the major-questions requirement for statutory clarity that could make it more difficult for the executive branch to make policy surrounding issues that Congressional lawmakers could have never anticipated like climate change, crypto currency and artificial intelligence, Rubenstein said. That’s of particular concern given that Congress has been so polarized in recent years that it’s been difficult for policymakers to pass laws directly addressing these issues, he said.
“How you regulate some of the major issues facing the nation today becomes much more difficult if agencies don’t have clear statutory authorization in a world where the court is applying the major questions doctrine,” he said.
Will the justices spend most of their time talking about standing or the merits?
Tuesday’s session won’t provide any clarity for student loan borrowers about the future of the Biden administration’s debt relief program, but they might get a sense of how the justices are thinking about these questions.
Walker said he’ll be watching closely to see what kinds of hypothetical scenarios the justices ask about to get a sense of what limiting principles they’ll be employing when they think about whether the parties have standing.
“Their biggest worry is they just don’t want you to be able to file a lawsuit when you’re unhappy with what the government is doing,” he said.
Bray said he’ll be paying close attention to whether the justices spend more time talking about if the parties have standing or the merits of the case. If they spend more time talking about standing, it could be because they don’t think they’re going to reach the merits, Bray said.
“Do the justices think of this case as a one off or as a part of a larger disturbing trend? And if they think of it as a larger disturbing trend, which one of two trends do they think of?” he said. “Do they think of it in terms of executive overreach to do things, big things that are not authorized by Congress? Or do they see it as part of a broader disturbing trend of states suing the federal government with fairly tenuous standing claims while seeking very, very broad remedies.”
‘Keep bringing the story back to the people’
While the justices and attorneys debate these broad legal questions inside the court house, hundreds borrowers and advocates will be rallying outside. The idea behind the gathering, which a coalition of student loan advocacy organizations, civil rights groups, labor unions and others is hosting is to “keep bringing the story back to the people that are going to get hurt if the Court takes away people’s right to student debt relief,” said Mike Pierce, the executive director of the Student Borrower Protection Center, one of the organizations participating in the rally.
The event comes after roughly a decade of building a movement of student-loan borrowers and advocates to push for transformative solutions to the nation’s student loan problem, including cancellation, he said. Though the rally is in part an effort to protect the policy from being struck down, Sabrina Calazans, managing director at Student Debt Crisis, said she also sees it as sort of a celebration of that movement.
“This rally is an opportunity for folks to gather and feel like I’m not alone,” said Calazans, who has about $30,000 in student debt herself.
Leigh Buettler, who follows updates on student loan news through the Student Debt Crisis Center, said she has found this kind of advocacy “exciting and empowering.” She added that it gives her some hope for a better future for student loan borrowers, regardless of the Supreme Court’s decision. And indeed, advocacy groups have pledged that if the court strikes down this debt relief plan they’ll push the Biden Administration to find another way to cancel student debt.
Still, Buettler won’t be following the debates the lawyers and justices have in the courtroom in real time. That’s because the nearly $100,000 she owes in student loans is a source of anxiety. Beuttler, 38, borrowed first during her undergraduate career. She worked full-time while in school, attended a community college for a period and finished her schooling at one of her state’s public colleges, but the efforts to keep costs low weren’t enough to protect her from taking on a loan. After graduating, Buettler borrowed to earn a master’s degree. During the Great Recession, she did it once more to earn a second master’s degree, a credential she needed to land a job as a teacher.
In the years since, Beuttler has struggled to pay her student loan bills, even with full time work as an educator, at times deferring and forbearing her loans. Before the payment pause went into effect, she was on a plan that allowed her to repay her debt as a percentage of her income. While that kept her current on her loan, Beuttler said it meant watching her balance grow and grow because her payments weren’t touching the principal.
Beuttler has also taken steps to have her debt canceled through a debt-relief program that’s already on the books. For years, she regularly submitted paperwork to track her progress towards having her debt canceled under the Public Service Loan Forgiveness program, an initiative that allows borrowers who work for the government and certain nonprofits to have their federal student loan balances wiped away after 10 years of payments.
She described that experience as “going through the motions,” without much optimism because she’d heard so many stories about borrowers who had worked in public service and paid their loans for 10 years, but struggled to receive relief. Beuttler submitted additional paperwork after the Biden administration temporarily expanded the payments that count towards forgiveness last year. She said she’s more confident she’ll ultimately have her debt canceled through PSLF.
Still, if the Supreme Court struck down the broader debt relief plan, Beuttler said she’d find it “very disempowering and very disappointing,” because it would throw a major obstacle in the way of transforming the student-loan system.
“I’m not hopeful,” Beuttler said, “but I’m also trying to be as optimistic as possible.” That advocates and activists were able to bring mass student debt forgiveness from the radical fringe to the steps of the Supreme Court gives Beuttler some confidence that these organizations can “continue and develop future forgiveness opportunities, but this in particular if it was blocked would feel really bad.”