States, local governments, scholars support student loan forgiveness

The briefs were filed in Nebraska v. Biden and Dept. of Education v. Brown, both of which the Supreme Court is reviewing to judge the legality of the president’s plan to forgive up to $20,000 in student loans for federal borrowers earning less than $125,000 per year. 

The coalition of proponents of forgiveness give a host of reasons for their support and challenge whether the six conservative states named in Nebraska v. Biden—Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina—even have standing to sue.

“This Court should uphold the lawfulness of Secretary of Education Miguel Cardona’s plan to provide critical relief to student-loan borrowers impacted by an unprecedented pandemic,” a group of civil rights lawyers write in one brief. “The plan will significantly impact borrowers thrown into financial distress by COVID-19.”

States that filed an amicus brief in favor of the student loan forgiveness program include California, Colorado, Massachusetts, Michigan, Nevada, New York, North Carolina, Pennsylvania, Washington, and others.

City and county governments in favor of forgiveness span the country, including Ann Arbor, Mich.; Atlanta; Cincinnati; Cleveland; Gary, Ind.; Houston; Jackson, Miss.; Kansas City, Mo.; Little Rock, Ark.; Montgomery, Ala.; St. Paul, Minn.; San Francisco; Tucson; and Waterloo, Iowa, among others.

“Student debt cancellation will strengthen state and local economies and promote household financial stability and public health, reducing reliance on state safety nets,” the governments write. “Among other things, the Secretary’s action will increase consumer spending and business development, promote homeownership, close troubling workforce gaps, and prevent rural ‘brain drain.’”

There is even support from a pair of conservative economists, Samuel Bray of Notre Dame Law School and William Baude of the University of Chicago Law School. While they believe that the administration’s forgiveness program is unlawful, they also believe the states suing to stop it do not have standing.

“Even if the executive branch has exceeded its authority…that does not permit the judicial branch to exceed its authority,” they write.

The argument for forgiveness

The Supreme Court is hearing two cases challenging the widespread student loan forgiveness plan. In Nebraska v. Biden, the states argue that their own finances will suffer, and that the Biden administration does not have the authority to cancel debt on its own. Rather, they argue, Congress must authorize the relief program.

In a separate case, Dept. of Education v. Brown, two individuals with student loans who do not qualify for the full amount of possible loan forgiveness are suing to halt the entire program. Their case argues that the Biden administration did not give the proper public commenting period as required by law before instituting the plan last year.

The Biden administration’s argument essentially says that the Higher Education Relief Opportunities for Students Act, or HEROES, Act of 2003 gives the Secretary of Education broad authority to institute changes to the student loan program in times of national emergency (in this case, the COVID-19 pandemic). Many of the briefs filed by advocates support this reasoning, including one from former California Rep. George Miller, who cowrote the legislation for the HEROES Act and was chairman of the House Education and Labor Committee in the early 2000s.

They also argue that the HEROES Act allows them to implement the program without the normal commenting period.

The advocates, legal scholars, and other petitioners say the HEROES Act gives clear power to Miguel Cardona, the current Secretary of Education, to institute changes because of the COVID-19 national emergency. The law allows him to “waive or modify” provisions related to student financial assistance programs, such as repayment terms.

“The HEROES Act specifically permits the Secretary to use this authority ‘as may be necessary to ensure that’ federal student-aid recipients who are affected by national emergencies ‘are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals,’” notes the brief filed by Miller.

The Biden administration argues forgiveness is necessary to prevent “extreme financial fallout” from the COVID-19 pandemic when the payment pause and interest accrual pause end. It also says inflation will exacerbate financial problems for borrowers, and that some will be at risk of default when the payment pause ends.

“No doubt, the student loan payment pause alleviated the financial hardship of the pandemic for many borrowers. But, at best, it was a stop-gap measure. Millions of borrowers will now re-enter repayment in a worse position than they entered the pandemic,” writes a collection of more than 70 legal services and borrower advocacy organizations in a brief. “All available data, and borrowers’ experience with the student loan system, indicate that the return to repayment will result in a sharp increase in borrowers suffering the harsh consequences of delinquency and default.”

A recent report from the Urban Institute found that most borrowers are not necessarily in a worse financial position than before the pandemic—that said, the researchers note, this could be because they have not had to make any federal student loan payments in nearly three years. The researchers also find that defaults will likely increase once payments resume.

Education secretaries under both Biden and former President Donald Trump used authority given under the HEROES Act to stop the payments and pause interest accrual.

Oral arguments are set for Feb. 28, 2023. More than 26 million Americans have applied for the one-time student debt relief, according to the Biden administration.

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