Student Loan Cases Give Supreme Court Path to Cut Biden’s Power

Two challenges this week to President Biden’s student-debt forgiveness plan give the Supreme Court a fresh chance to unravel his agenda and drastically weaken future presidents’ authority in areas beyond higher education.

The justices on Tuesday are set to hear arguments in cases that primarily focus on whether the administration has the power to unilaterally forgive student debt for as many as 40 million borrowers. But within those cases, the high court is being asked to limit how federal agencies spend tax dollars and dilute the president’s ability to direct changes across the executive branch.

Conservatives hope the right-leaning court uses the opportunity to expand on last year’s landmark ruling constraining the president’s ability to regulate environmental emission standards and other conduct without what Chief Justice John Roberts called “clear congressional authorization.” The decision could instantly reshape how Biden and his successors tackle topics ranging from policing the US-Mexico border to water pollution to labor.

In its brief to the court, Americans for Prosperity Foundation, a group backed by billionaire Charles Koch, contended that the issue at its core wasn’t about the fairness of canceling hundreds of billions of dollars in debt. “Instead, this case is about whom the Constitution empowers to make that decision,” it argued.

Biden’s student-loan forgiveness plan relies on a 2003 law that allows the Education Department to waive loan requirements for borrowers in an emergency, such as a natural disaster or war. The department in August declared the Covid-19 pandemic such an emergency, even after national death and infection rates had plummeted.

Cases Explained

In the first of the two challenges, Biden v. Nebraska, six Republican-led states want the justices to permanently block Biden’s plan. They argue that the pandemic is not a national emergency as defined in the 2003 law. Among other claims, the states assert they’ll lose revenue if student-debt forgiveness proceeds.

A Missouri judge initially dismissed the suit, finding that the states lacked standing to sue. But the US Court of Appeals for the Eighth Circuit in October blocked the forgiveness program and reinstated the claim. The Supreme Court later agreed to consider the lawsuit.

Student loan protestors gather near The White House in Washington, D.C.

Photographer: Paul Morigi/Getty Images for We, The 45 Million

In the second case, Department of Education v. Brown, a conservative advocacy group sued on behalf of two borrowers who claimed the plan unfairly excluded their debts. They argue that the justices should invalidate the forgiveness initiative because the Education Department skipped required steps before carrying out the effort, including asking the public for feedback. When a Texas judge agreed and vacated the program nationally, the Biden administration appealed to the Supreme Court.

The argument against skipping steps gives the justices an opening to reverse Biden’s efforts without dramatically shrinking the power of future presidents to make decisions on other topics, said Andrew Rudalevige, who studies presidential power at Bowdoin College.

The court could say “it’s not that the president doesn’t have the power to do X, but it wasn’t done in the right way,” Rudalevige said.

Biden’s debt-relief plan will cost the US Treasury at least $400 billion, the Congressional Budget Office estimated in September. However, that figure is “highly uncertain” in part because it depends on future economic conditions, said Phillip Swagel, the office’s director.

Separate from his student-debt plan, Biden in January also proposed repayment reforms that would help borrowers cut monthly payments on their undergraduate loans. But that proposal, designed to help them purchase a home or save for retirement, isn’t at risk in the two Supreme Court cases.

Growing Skepticism

Both cases land as the federal courts have become increasingly skeptical about the power of the president to act without explicit direction from Congress, a departure from years of deferring to federal agencies on how to interpret ambiguous laws.

At the same time, Congress has often declined to pass legislation addressing the challenges the president wants to tackle, such as immigration or climate change, pushing the chief executive to act on his own, scholars on the presidency said.

“Presidents realize: ‘I have lots of tools with the executive branch. I may not have such a good chance with Congress,’” said Michelle Belco, an American government professor at the University of Houston. “And consequently, maybe this is the way to go.”

President Barack Obama crafted his own deportation protections for immigrants because Congress declined to overhaul immigration laws. A coalition of conservative states accused the president of abusing the power of his office; a district judge agreed and ordered the program shut down. The Supreme Court divided evenly in the case, and the lower ruling stood.

President Donald Trump also pushed the boundaries of his authority when he declared a national emergency on the US southern border to unlock billions of dollars to build the wall he promised. A flurry of lawsuits followed, accusing the president of circumventing Congress’ power to determine how taxpayer money is spent. An appeals court ultimately deemed Trump’s action illegal and the Supreme Court didn’t intervene.

Since that ruling, the high court has moved even further to the right, and conservatives have elevated a decades-old judicial doctrine in their bid to diminish Biden’s authority.

‘Major Questions’

The theory, known as the major questions doctrine, contends that US agencies can’t implement major policies, particularly those with “vast economic and political significance,” without specific approval from Congress.

The term has been cited much more often in federal filings in recent years, according to a limited Bloomberg Law analysis.

Its most prominent mention came last year, in a majority opinion the chief justice wrote in West Virginia v. EPA. That decision constrained the president’s ability to regulate power-plant emissions and other areas of American life. Roberts referenced prior case law that said agencies must point to “clear congressional authorization” when undertaking policies of great “economic and political significance.”

Justice Neil Gorsuch, along with Justices Clarence Thomas and Samuel Alito, also invoked the doctrine in a concurring opinion on a case striking down Biden’s vaccine-or-test requirement for large companies. The justices said that Congress “has nowhere clearly assigned so much power” to the federal agency that wrote that rule.

The GOP state leaders arguing against student-debt forgiveness cite the doctrine six times in their brief. The leaders also noted the court majority’s limited view of the president’s power in coronavirus-related cases.

“The administration is once again invoking the Covid-19 pandemic to assert power far beyond anything Congress could have conceived,” lawyers for the Republican-led states wrote.

Jeff Dubner, an attorney arguing for student-debt relief on behalf of a group of law professors that study presidential power, said the cases represent “the first opportunity after West Virginia for the Supreme Court to apply what it sketched out there.” Dubner works at Democracy Forward, a progressive legal group known for challenging dozens of Trump-era policies.

Biden’s Next Steps

The Supreme Court is expected to rule in both student loan cases by late June.

But the majority’s support for the doctrine in West Virginia already puts greater pressure on federal agencies to tailor their decisions to the text of the laws that govern their departments, even as similar court challenges loom to programs that impact millions of people.

That includes immigration. Twenty mostly Republican-led states last month sued Biden, contending that he lacked the authority to temporarily allow people fleeing Cuba, Haiti, Nicaragua, and Venezuela to live and work in the US.

Judge Drew Tipton, a Trump appointee in Texas who has been hostile to Biden’s other immigration plans, is scheduled to hear that case.

The Federal Trade Commission’s bid to prohibit companies from blocking their employees’ ability to work for a competitor is also likely to spark a court challenge testing the breadth of the agency’s power, administrative law scholars said. The proposal isn’t final.

The president is also awaiting the Supreme Court’s ruling in Sackett v. EPA, a lawsuit that challenges the limits of the federal government’s power to protect streams and wetlands. The court is widely expected to narrow the government’s authority.

A few Biden administration environmental proposals hinge on the outcome of the case.

The student loan cases are Biden v. Nebraska, 22A444 and Department of Education v. Brown, 22-535.