The Daily - Will the Supreme Court Let Biden Cancel Student Debt?

Episode Date: March 2, 2023

In August, President Biden announced a loan cancellation plan that would erase an astonishing $400 billion in student debt — one of the most ambitious and expensive executive actions ever.Now, in a far-reaching case, the Supreme Court will decide whether the president is authorized to take such a big step.Guest: Adam Liptak, a Supreme Court correspondent for The New York Times.Background reading: The student loan case could redefine the limits of presidential power.Here’s how the arguments at the Supreme Court played out and what to expect in the coming days.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

This is Sydney Harper, Daily Producer. I'm here outside the Supreme Court in D.C. It's Tuesday morning, and I'm looking at a protest of a bunch of people who are here in favor of the student loan debt cancellation program. Notice! Can you hear us? Notice! Can you hear us? Debt relief is legal! Debt relief is legal! Debt relief is legal!

From The New York Times, I'm Sabrina Tavernisi, and this is The Daily. This week, the Supreme Court heard arguments in a case against President Biden's student loan cancellation program. That program would wipe out an astonishing $400 billion in student debt. The case seeks to reverse that. Hi, y'all. I'm just curious about people's student debt. And I'm just trying to hear some numbers from people about what they owe. Some numbers.

$25,000. Yeah. I think I have about like $40,000. For student loan debt? Yeah. How much? Yeah. How much? Yeah. Approximately $130,000 in student loans.

Your mouth is open right now. That's a lot. That is a lot. What do you owe in loans? Oh, $36,000, but I'd say $35,000 to make myself feel better. And does it make you feel better? No. I just crossed six figures this year so it's extremely worrying that I'm not going to be able to build that generational wealth for my children,

my children's children, so that way they don't have to take out loans in college. So I just worry about the future of my family and generations to come if I'm unable to get out of this debt myself. Today, my colleague Adam Liptak on how the court might rule and what that will mean for more than 40 million Americans. It's Thursday, March 2nd. Thursday, March 2nd. So Adam, tell us about the case the Supreme Court heard on Tuesday. The Supreme Court is considering whether President Biden can embark on one of the most ambitious and expensive executive actions ever.

It's a big case on a practical level, but it's also a big case on a kind of legal and constitutional structure level, asking when the president is authorized to take such a big step and what Congress had to do to give him that authority. Remind us how we got here. Well, this, like so much of the life we lead these days, has its roots in the pandemic. And when the pandemic started in March of 2020, President Trump and his Education Secretary, Betsy DeVos, decided that the pandemic warranted emergency action

and that they would pause repayment obligations for everyone who has federal student loans and also interest accrual. And he relies on a 2003 law, the Higher Education Relief Opportunities for Students Act, people call it the HEROES Act, initially passed after the September 11 attacks, says this, that the education secretary can waive or modify any statutory or regulatory provision to borrowers affected by a war or other military operation or national emergency. And that phrase, national emergency, does all the work. And it allows President Trump and his education secretary, Betsy DeVos, to pause loan repayments and interest

accrual. Okay, so that's Trump easing the financial burden on millions of students. Then Biden comes in. What does he do? Initially, President Biden continues the loan pause. It continues to cost the government lots and lots of money. But there comes a time when he sees that the pandemic is going to end. And back in August, he decides that the repayment pause would end and that instead he would forgive a great deal of the debt. Relying on the HEROES Act, he would forgive $10,000 for people making $125,000 or less, or $20,000 for people who'd received Pell Grants for poor students in college.

And this was in the face of some doubt on the scope of his authority, on whether he had the power to make this enormous move of forgiving more than $400 billion of debt. Yeah, that kind of action is obviously a step further than what both Trump and Biden have been doing to that point. So what's the response? The response among Democrats, and particularly among young Democrats, was enormously enthusiastic. and particularly among young Democrats, was enormously enthusiastic. And it also engendered a kind of fury on the right,

who didn't think the president has this power, who, you know, call him King Biden, and who promptly went to court all around the country, but most notably in a case brought by six Republican-led states, to say the president was not authorized to do this, and that the HEROES Act did not give him the power to forgive all his debt. Right. And all of that leads us to Tuesday with the arguments in this case before the Supreme Court. So what happened in the court? What did the administration say? Well, I should mention that there were actually two cases about the Biden plan before the court. One was brought by two borrowers, but I think that case was minor and not likely to succeed.

Then there's the second one, the main one, which was brought by six states. It was mainly on behalf of an agency in Missouri, which they claim was damaged by the Biden plan. And in that second case, again, the basic question was whether the coronavirus pandemic justified, under this Heroes Act of 2003, the wholesale cancellation of hundreds of billions of dollars in student debt. You'll hear argument first this morning in case 22506, Biden versus Nebraska. The Biden administration, represented by the Solicitor General, Elizabeth Breelager, makes a couple of basic points. Mr. Chief Justice, and may it please the court,

COVID-19 is the most devastating pandemic in our nation's history, and it has caused enormous disruption and economic distress. One is to remind the justices of what a devastating economic impact COVID had, particularly on people with student debt. Over the past three years, millions of Americans have struggled to pay rent, utilities, food, and many have been unable to pay their debts. And to say that it would cause a devastating blow to people and cause many of them to default if they were made to repay the sums that the administration wants to forgive.

But if that forbearance ends without further relief, it's undisputed that defaults and delinquencies will surge above pre-pandemic levels. And then she went on to make the legal point. That the HEROES Act, she says, completely and comfortably authorizes the Secretary of Education to waive or modify any statutory or regulatory provision which she says encompasses student debt. And how did the justices respond to that argument? Well, the more conservative justices were not at all persuaded. You're arguing here that the president can act unilaterally, that there was no role for Congress to play in this either.

And Chief Justice Roberts, in particular, right out of the gate, The president can act unilaterally, that there was no role for Congress to play in this either. And Chief Justice Roberts, in particular, right out of the gate, says that if you're going to spend these kinds of sums of money, you need particularly clear congressional authorization, and he didn't see it. Now, we take very seriously the idea of separation of powers and that power should be divided to prevent its abuse. He thought that the separation of powers doesn't allow the executive to act on its own, and he invoked a concept the court calls the major questions doctrine. You would recognize at least that this is a case that presents extraordinarily serious,

important issues about the role of Congress and about the role that we should exercise in scrutinizing that? Significant enough that the major questions doctrine ought to be considered implicated? And Adam, what is the major questions doctrine? It's a judicially created doctrine that says the bigger a deal is, the bigger the political stakes are, the bigger the economic stakes are, the more Congress has to speak clearly. That even if you have some statutory language that may authorize you to do something minor, if it's a big enough deal, and the Chief Justice says half a trillion dollars is certainly a big enough deal, Congress has to speak exceptionally

clearly. Congress has to give really clear authority to the president to do what he wants to do if the question is major. Right. But, you know, there is something that the conservatives are saying here that's true, which is like there's a lot of money involved here, right? So it does, in a way, feel like $400 billion would qualify as major. Right. And even Justice Sonia Sotomayor, a liberal, says, well, on that, you know, she doesn't disagree, that the sums of money involved are major. And I think probably the ordinary American, as a matter of common sense, would at least want to know that Congress has blessed this idea. So even if you have consensus that it's a lot of money, and most people would say, given the sums of money involved, you want Congress to have blessed it. That just takes you back to the HEROES

Act, and in particular, to the question of what does waive or modify mean. General, is this a waiver or is it a modification? It's both a waiver and a modification, Justice Thomas. A couple of the justices, Chief Justice Roberts and Justice Clarence Thomas, seem pretty clear that they didn't think waive or modify meant cancel. We're talking about half a trillion dollars. How does that fit under the normal understanding of modifying? That that was something different. Well, would you take a minute to explain how a waver or modification amounts to a waver?

So you see that even on the court, people are struggling with just how far you can take those words from 2003, waive or modify. And how did the Biden administration respond to that skepticism about the language? It said the language plainly covers exactly what happened here. It talks about responding to an emergency. Congress already made the judgment that in the context of a national emergency, you should be able to...

She said Congress anticipated that it would be giving the Secretary of Education power in an emergency to be nimble and aggressive. So there's not the same mismatch here of taking an old statute and dusting it off and deploying it in a context where Congress could never have imagined it would be used before. Instead, this is a perfect fit with the problem that the secretary confronted. So she seemed quite comfortable and confident that the statute gave them the power they invoked. And were the justices convinced by that? That the Biden administration actually had the full power to do it under the statute? The right side of the court, the sixth justice conservative majority, did not seem persuaded by these arguments.

And some of them also talked about not buying it as a matter of fundamental fairness. What I think they argue that is missing is cost to other persons in terms of fairness, for example. So you had Justice Neil Gorsuch talking about what about people who've paid off their loans? What about people who've paid off their loans? People who have planned their lives around not seeking loans and people who are not eligible for loans in the first place and that half a trillion dollars is being diverted to one group of favored persons over others. And he said half a trillion dollars are being diverted

to one group instead of another. I didn't see anything in the memorandum that dealt with those kinds of questions. And if there is something, I'd be appreciative if you could point me to it. No, there's not. So at this point, we've really gone beyond the issue of separation of powers, it sounds like. Like really the conservatives are taking issue with the program itself. They're really doubtful about the wisdom and fairness of the program. Chief Justice Roberts proposes a distinction. He says some people take out loans and go to college, and they do very well in life, and we're going to

forgive those loans. Some people start small businesses. Some people start a lawn care business and take out loans. We're not going to forgive those loans, even though those people typically might do less well than people with college degrees. And then he makes a characteristically smart pivot and says, but of course, my views of fairness don't count. Your views of fairness don't count. But where there are questions of fairness in play, that is typically a question for Congress. He says Congress decides how to spend taxpayers' money. If there are questions of fairness involved, maybe Congress should have acted. But the bottom line, Sabrina, is that the conservative justices were not buying what the Biden administration was selling.

We'll be right back. Adam, what did the state's lawyer argue? I mean, the side that was suing the Biden administration. James Campbell, Nebraska's Solicitor General, arguing for these six Republican-led states, makes a couple of basic points. First, he said, whatever the Trump administration did in the heat of the pandemic to pause loan repayment for a relatively brief period of time maybe fits within the HEROES

Act, maybe said to be a modification. I think arguably that was a legitimate use of the HEROES Act because taking a congressionally created six-month program and extending it for three months seems like it might be a modification. But now with the pandemic receding and the completely different tack, he says, that the Biden administration is taking, not in pausing, but forgiving entirely, huge sums of money, he says, is clearly not authorized by the HEROES Act. But now that we're two years down the road, we're beyond modification, and not only that, the connection to the national emergency has become even more tenuous. And how do the liberal justices respond to this argument?

I've got to say, Sabrina, they seemed a little incredulous. You know, Congress could not have made this much more clear. I mean, Congress didn't say exactly the circumstances in which it wanted the secretary to use this authority. Of course not. This is a bill about what happens when you have an emergency. Justice Elena Kagan, for instance, says that Congress could hardly have been clearer.

Congress said the secretary could act where there was an emergency. Nobody doubts that this was an emergency. That's what happens when you give people emergency power. And she has a back and forth with Mr. Campbell about a hypothetical. So let me give you an example. Suppose like there's an earthquake. We'll use an earthquake instead of a pandemic. What if it's an earthquake? What if it's an earthquake instead of a pandemic? Can the secretary allow loan forgiveness in that circumstance? Could the secretary say, well, there was this terrible earthquake and lots of people's houses were destroyed. And I'm going to discharge the loans of people whose houses were destroyed in this terrible earthquake. And Campbell says, no, that's not a waiver or modification.

Your Honor, it sounds to me like creating a new program. I don't think that that would be okay under the HEROES Act. Kagan responds, but this is very broad language. You can modify or waive any statutory or regulatory provision. This is an emergency provision. There's an emergency. It's an earthquake. You don't think Congress wanted to give, and not just wanted, it's not what Congress thought, it's what Congress said, to give the secretary power to say, oh my gosh, people have had their homes wiped out. We're going to discharge their student loans. And Campbell says no. Your Honor, when it comes to taking that ultimate step to discharging loans,

Congress wanted to preserve that for itself. That the HEROES Act may allow some minor modifications, but not the wholesale forgiveness of student loans. And how is Kagan during this exchange? She's increasingly exasperated, and she turns to what the liberals may think is their only real hope of prevailing in this case. And that's a question the court has to answer before it reaches whether the Biden administration had acted lawfully. And that's whether anyone has suffered the sort of harm that gives them standing to sue. Adam, remind me, what do you mean by standing? Well, the Constitution says the federal courts can only decide actual cases or controversies, and that's understood to mean that you have to have a stake in the case. You can't just be

interested in, you know, Supreme Court, tell me I'm not happy about what the Biden administration has done here, and I'd like you to give me your opinion. You have to have been hurt, and the result of the decision has to help you. So in other words, you have to be a party in the case, someone injured in the case. Right. And in this case, there were serious questions about whether any of the plaintiffs had standing to sue. serious questions about whether any of the plaintiffs had standing to sue. The states mainly claim to be bringing their suit on behalf of this semi-independent Missouri entity, the Missouri Higher Education Loan Authority, which everyone calls MOHILA, which they claimed would be hurt financially because of Biden's move. Mojila isn't here, General Crawford.

Is that correct? Mojila is not here, but its interests are here. It has the ability to sue and be sued. It's been set up as an independent corporate entity with the ability to bring suits on its own. And the Solicitor General said, yes, that entity might have standing. But that entity was not before the court.

And the liberal justices and Justice Kagan in particular said, listen, it's an independent corporation. It has chosen not to sue. Usually we don't allow one person to step into another's shoes and say, I think that that person suffered a harm, even if the harm is very great. We leave it to the person, him or her or itself, to make that judgment. And she says, we don't think that a state should be able to step into the shoes of an injured party and say that its harm translates into the state's harm and gives it standing to sue. I mean, there are third parties all the time who have an interest in, gosh, I wish that party over there would bring a suit because I have some relationship with

that third party and I would like it very much if that third party represented its own interests better, in my view. But we don't do that. We don't allow that kind of interference with the decision of the entity involved to decide whether the harm is of the kind that they want to sue for. And the bottom line of all of these arguments and complications is that there are serious questions about whether anyone has standing to sue. And that might be the best argument for the liberals and for the Biden administration, given how hostile the conservative majority was to their basic claim that they have the right to cancel these loans under the HEROES Act.

Right. And from what you've said, it doesn't really seem like the conservative majority would be that receptive to dismissing the case based on standing? They basically did not engage on standing. So I suppose there's a remote possibility that the Biden administration pulls out a win on that ground, although it doesn't seem likely. It seems like this will be yet another case in which the court breaks along predictable lines with the six Republican appointees in the majority.

Another six to three. That's right. So in a way, this seems to be just another case that will be decided on predictable partisan lines within the court. But to go back to the beginning of our conversation, Adam, the Biden administration wasn't necessarily on sturdy legal footing to begin with, right? I mean, it was a bit of a stretch legally. And they knew it would be controversial. And they knew there would be court challenges. And yet they pushed it through right before an election anyway.

Right. So think about the politics of it for a second. It was surely good politics for the Democrats in the midterms to have made this promise. for the Democrats in the midterms to have made this promise. And I'm not sure it's bad politics for the Democrats to lose before a hostile Supreme Court. Politically, they could say to their base, we did what we could. We're stuck with a court that routinely pushes back against our progressive initiatives.

And we're fighting as hard as we can. Adam, stepping back here, what does it mean for the tens of millions of Americans who actually hold this debt? So we'll get a decision probably at the end of June that will be full of legal concepts about standing and major questions, doctrine and Heroes Act and presidential authority and separation of powers. And I don't think the borrowers are going to read the decision. They're just going to look at the bottom line. And what that bottom line seems to be is that they will feel robbed in a sense. They will feel that they had been promised by the Biden administration significant, sometimes life-altering debt relief coming out of the pandemic,

and it might feel a little ugly to them. It will represent a missed opportunity and dashed hopes. Adam, thank you. Thank you, Sabrina. We'll be right back. Here's what else you should know today. On Wednesday, Israeli police used stun grenades and water cannons against thousands of protesters in Tel Aviv. used stun grenades and water cannons against thousands of protesters in Tel Aviv, a significant escalation in the confrontation between Israel's new government,

the most right-wing in the country's history, and its critics. Protests have been disrupting life in Israeli cities for eight weeks over the new government's push to make changes to the country's Supreme Court. Opponents say the changes threatened to turn Israel into an autocracy. Several dozen protesters were arrested and a number were injured. Today's episode was produced by Ricky Nowetzki, Sydney Harper, and Jessica Chung. It was edited by Mark George, Michael Benoit, and Lexi Diao. Contains original music by Marian Lozano and Thank you.