Here’s How the Supreme Court Could Rule on Student Loan Forgiveness

The U.S. Supreme Court is preparing to weigh in on the legal battle over President Biden’s student loan forgiveness program, which is currently blocked by two different rulings. But, legal experts say that even if the court sides with the Biden Administration, there are still legal hurdles that will delay relief for borrowers.

In a filing on Friday, Solicitor General Elizabeth Prelogar asked the Supreme Court to vacate a nationwide injunction on the debt-forgiveness program or “set the case for expedited briefing and argument this Term to avoid prolonging this uncertainty for the millions of affected borrowers.”

Meanwhile, the Education Department began notifying some borrowers that they were approved for student loan forgiveness, while acknowledging that they won’t actually see any debt relief until these legal challenges are resolved.

On Tuesday, Biden announced that the Education Department will extend the pandemic-related pause on student loan repayment while the litigation plays out, aiming to “give the Supreme Court an opportunity to hear the case in its current term.”

Student loan payments will resume 60 days after the debt-forgiveness program begins or after the legal challenges are resolved. If there isn’t a resolution by June 30, 2023, student loan repayments will resume 60 days after that.

“We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests,” Education Secretary Miguel Cardona said in a statement.

The debt-relief program—which would give up to $20,000 in debt forgiveness to about 40 million borrowers—was put on hold earlier this month after a federal judge in Texas blocked the program. Then, the U.S. Court of Appeals for the Eighth Circuit, considering a separate lawsuit, issued a preliminary injunction against it on Nov. 14.

“The Eighth Circuit’s erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations,” Prelogar said in the filing.

Legal experts say it’s hard to predict how the Supreme Court will rule, given the many complicated questions at play. The court could eventually rule on the legal merits of the student loan forgiveness program. However, right now, the court is only deciding whether to allow the Eighth Circuit’s injunction blocking the program to continue.

“For the Biden administration, and for actual people, what matters is whether the current state of affairs remains,” says Tara Grove, a University of Texas School of Law professor who focuses on the federal judiciary and separation of powers.

Grove thinks it’s possible the Supreme Court will allow the appeals process to play out with the injunction in place, but she thinks it’s just as likely the court could determine the plaintiffs lack standing—meaning that they would be immediately harmed by the policy—and reverse the block on student loan forgiveness.

“At least so far, the Supreme Court has shown an unwillingness to get involved in lower court proceedings around these preliminary injunction type of issues,” says Thomas Bennett, an associate professor of law at the University of Missouri, who studies federal courts and constitutional law.

And he notes that reversing this injunction alone won’t allow the debt-relief program to resume because the program was also blocked by a federal judge in Texas in a separate case. The Justice Department appealed that ruling.

“It’s unlikely the Supreme Court will sort out these preliminary issues until it has all of those cases before it,” Bennett says.

The Supreme Court asked the plaintiffs to file a response by Wednesday.

The back-and-forth over the case has focused heavily on whether the plaintiffs—six Republican-led states who argue they will be harmed by lost tax revenue as a result of debt cancellation—have standing to sue. U.S. District Judge Henry Autrey initially dismissed the lawsuit in October, saying the states lacked legal standing because the program’s “effect upon future taxation is uncertain.”

But the Eighth Circuit Court of Appeals concluded that Missouri, one of the six states, likely has legal standing, saying that the Missouri Higher Education Loan Authority (MOHELA), a student loan servicer, will lose revenue because of debt cancellation and “may well be an arm of the State of Missouri.” While the court did not yet rule on the legal arguments in the case, it granted a preliminary injunction, noting that the outcome of the case will affect the finances of millions of Americans.

It’s not clear if the Supreme Court will agree with that reasoning. But some insight into the court’s view on state standing can be found in the 2007 case, Massachusetts v. Environmental Protection Agency. In a 5-4 vote, the Supreme Court decided that Massachusetts had standing to sue the agency, favoring the idea that states deserve “special solicitude,” or special consideration when trying to prove legal standing.

But the makeup of the court is different today, and its conservative majority could lead to a different outcome.

In the 2007 case, Chief Justice John Roberts dissented—along with conservative justices Antonin Scalia, Clarence Thomas and Samuel Alito—arguing that Massachusetts should not have had standing to sue because the state had not suffered a concrete injury. “The constitutional role of the courts, however, is to decide concrete cases—not to serve as a convenient forum for policy debates,” Roberts wrote in his dissent.

Grove says the Eighth Circuit “took a narrow approach” in addressing the standing question, focusing only on Missouri.

If any state were able to sue over a federal program because of its effect on tax revenue, she says, that could open the floodgates for lawsuits over any number of federal programs. “I think what the Eighth Circuit was clearly trying to do was allow a lawsuit that would not open the floodgates to lots of other standing claims,” Grove says.

Nonetheless, the Biden Administration criticized the Eighth Circuit’s reasoning for the injunction and argued that the plaintiffs lack standing to sue. “That analysis does not suffice to support any injunction—much less a universal injunction prohibiting the government from implementing a critically important policy with direct and tangible effects on millions of Americans,” Prelogar said in the filing.

Beyond the standing question, if the Supreme Court ends up ruling on the legal arguments involved in this case, experts say the justices could rule against the Biden Administration, based on previous decisions against executive actions.

“It’s entirely possible that judges that are kind of skeptical of executive action or administrative action would strike it down and enjoin it,” Michael Sant’Ambrogio, a law professor at Michigan State University, who studies administrative law, federal courts and constitutional law, said in a previous interview. “That’s a very real risk at the moment.”

The Biden Administration has maintained that the President has the legal authority to roll out the debt-forgiveness plan.

“​​We’re asking the nation’s highest court of the land to allow us to deliver student debt relief to millions of middle-class Americans,” White House Press Secretary Karine Jean-Pierre said during a press briefing on Friday. “We are confident in our legal authority to carry out this program, and we won’t let these baseless lawsuits stop us.”