Student Loan Ruling Undercuts Future Emergency Relief Efforts

The US Supreme Court has undermined the law Congress passed to help people when there’s a terrorist attack, natural disaster, or pandemic.

The justices ruled 6-3 on Friday that President Joe Biden lacks the authority to cancel $430 billion in student loan debt for 43 million borrowers. Legal scholars and policy experts say the court has created an opening for challenges whenever future administrations try to waive interest rates, pause payments, or relieve federal student loan debt under the Higher Education Relief Opportunities for Students, or HEROES, Act.

That’s because the law doesn’t explicitly authorize any one specific action, but rather gives the Education Department discretion and that discretion was limited by the court’s decision, said Jeffrey Dubner, acting legal co-director of Democracy Forward, a national legal advocacy organization.

The justices “are quite comfortably not reading the statute for all it’s worth, not reading it for what Congress actually said was the secretary’s authority and that leaves it unclear what a secretary can do with the HEROES Act,” he said. “It cuts off the tool that Congress intended to protect borrowers in national emergencies.”

Writing for the majority Biden v. Nebraska, Chief Justice John Roberts said it’s a misreading of the HEROES Act to conclude it authorizes such a sweeping and expansive debt relief program. But Adam Minsky, a Boston-based attorney who’s focused on helping student loan borrowers, said Roberts seems to be narrowing the language in the statute by saying any waivers or modifications under the HEROES Act have to be fairly minor.

“He’s reading text into the statute that isn’t there to limit its applicability to emergency situations. That’s how I’m interpreting this decision,” Minsky said. “It’s a remarkable constraint of HEROES Act authority going forward.”

Major Questions

In challenging the debt relief plan, Nebraska and five states relied on a legal principle known as the major questions doctrine, which says courts should presume Congress doesn’t generally give agencies the authority to implement policies of great economic and political significance. It was an argument the court agreed with.

Roberts called the economic and political significance of the education secretary’s action “staggering by any measure.” He quoted from the court’s decision to restrict the authority of regulators under the Clean Water Act earlier this term, saying a decision of such magnitude and consequence, on a matter of earnest and profound debate across the country, must rest with Congress itself.

By siding with the states and applying the major questions doctrine here, Dubner said the court has put an amorphous range of actions off limits and opened the door for challenges to future agency activities.

“The agency will have to essentially slow down all of its relief to guess at how courts might resolve challenges rather than having the efficient and expeditious authority Congress intended,” he said.

Congress passed the HEROES Act in 2001 to help active duty military after the 9/11 attacks. The law gave the education secretary the power to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” when there’s a war or military operation. Congress then expanded that authority in 2003 to include national emergencies.

Dissenting for the court’s liberal wing, Justice Elena Kagan said the court’s ruling makes the HEROES Act “inconsequential.”

“The Secretary emerges with no ability to respond to large-scale emergencies in commensurate ways,” she said. “The creation of any ‘novel and fundamentally different loan forgiveness program’ is off the table.”

Kagan told readers to imagine what would happen if a terrorist group were to set off a dirty bomb in Chicago, making the city uninhabitable. Even though people would be forced to find new houses and jobs, “their student-loan bills are coming due every month,” she said.

Lanae Erickson, senior vice president at the center-left think tank Third Way, said repercussions of the court’s decision could go far beyond the HEROES act and impact presidential powers more broadly. She said that may not be a bad thing.

“Making policy by executive fiat is not preferred,” she said. “It leads to wild swings back and forth in the rules of the road and I don’t think that’s good for most Americans.”

Lawmakers are already working on proposals to overhaul how the government responds to national emergencies. Legislation introduced in the Republican-led House (H.R. 3988) would allow the president to declare a national emergency, but limit that declaration to 30 days unless Congress agrees to extend it.

“The idea there is there are some emergencies that need fast action and Congress isn’t particularly fast,” Erickson said. “When we have, say, a global pandemic, there are some things that need to happen immediately and can’t wait for legislative processing but those things are usually time bound.”