A Challenge to Student Debt Relief

Today, the Supreme Court will hear arguments over whether President Biden can cancel student debt. The justices’ eventual ruling will affect tens of millions of low- and middle-income Americans who could qualify for up to $20,000 in student debt forgiveness.

The case itself, however, revolves more around technical legal arguments than around policy debates about whether borrowers need help. Today’s newsletter will explain both the underlying issues and the legal arguments.

What is the case for debt relief?

For years, progressives have called attention to the increasing education debt that many Americans have accumulated, demanding that the federal government cancel some or all of it.

The Biden administration heeded their calls, though it took a relatively cautious approach. It limited eligibility to single Americans making up to $125,000 a year and married couples making up to $250,000. Those eligible can get up to $20,000 in debt relief. The goal was to aid low- and middle-income Americans in particular, administration officials have said.

The program would help around 40 million Americans. It would cost around $400 billion over 30 years. In comparison, the clean energy funding in last year’s climate bill totals about $400 billion over 10 years.

Biden proposed this program because related legislation did not have enough support to pass Congress. He cited a federal law that allows his administration to take action during a national emergency. Both he and Donald Trump used that law to pause loan repayments earlier in the pandemic, when the U.S. unemployment rate reached its highest point since World War II. The Biden administration wanted to go further to actually cancel some debt.

But without congressional approval, the program is more vulnerable to legal challenges. Six states sued to stop it last year. Courts put the program on hold while the legal challenges play out.

What do critics say?

They say debt relief is an overreach of presidential power. The Wall Street Journal editorial board has argued that allowing such a sweeping and expensive program to continue would amount to letting the president “steal Congress’s power of the purse and act like a king.”

Critics argue that the administration has yet to demonstrate that Covid hurt those who would benefit from student debt relief. In fact, the White House has said that “household finances are stronger than pre-pandemic.” The critics also point out that the Biden administration plans to end the officially declared emergency for Covid this spring.

“I’ll be interested in whether the administration’s statement that the pandemic emergency will end in May makes some of the justices skeptical about whether the loan forgiveness program is warranted,” my colleague Adam Liptak, who covers the court, said.

What is Biden’s response?

The administration argues that the program is tailored to help Americans who could be left worse off by the pandemic.

To the extent those people are doing better now than they were before the pandemic, it is largely because the federal government provided so much help, including the student debt reprieve, the administration argues. And the economic effects of Covid linger.

A political reality is also clear, though White House officials typically won’t acknowledge it publicly: This approach is the best they could come up with so long as Congress doesn’t act on student debt.

It is a pattern that has persisted over the past couple of decades. When Congress is gridlocked, presidents often try to act unilaterally. But presidents have limited latitude for new policies without new legislation, so their unilateral actions are more vulnerable to legal challenges — putting the courts at the center of major political battles. “The courts are powerful in the U.S. because the legislature is broken,” Kim Lane Scheppele, a legal expert at Princeton University, said.

What could the court do?

The court case itself is not about the merits of the program, but about the president’s powers in the absence of a mandate from Congress.

If the Supreme Court agrees with Biden’s critics that the loan forgiveness plan is presidential overreach, the court could end the program entirely. It could also further limit presidential powers beyond debt relief, potentially restraining executive actions on other fraught political and economic issues. Given the court’s 6-3 conservative majority, that outcome is plausible.

There is a second legal question in the case: whether states have the right to sue at all over the program. The details can get painfully technical. The Biden administration has argued that the states have failed to show how the program hurts them and so lack the standing to sue. If the court disagrees, it could empower states to bring even more legal challenges to federal policy.

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