EDITOR’S NOTE: The reporting for this story was supported by funding from the Economic Hardship Reporting Project.
The Supreme Court hadn’t even finished the hearing about President Biden’s student debt cancellation policy when mainstream media outlets began ringing the funeral bells for its impending demise. True, the conservative justices had been quibbling over the program’s merits. But was a death knell really warranted? This Supreme Court has hardly distinguished itself as an ally for mass liberation. Even the president didn’t seem to think his program would survive SCOTUS’s assault—despite his belief in its legality.
But framing student debt cancellation as already dead in the water obscures the larger questions looming in this debate. It overlooks the movement work that has driven Biden’s policy in the first place. The fact that student debt cancellation has made it to the highest court in the land reveals the success of our movement, the boldness of its vision, the length of its horizon—not the end of its march. Political obstacles to debt cancellation are not exactly new. It’s taken years to get this far. It’s no small victory that the Biden administration’s solicitor general, Elizabeth Prelogar, forcefully argued many of the same points that activists, advocates and debtors have been pressing for years: Debt cancellation is perfectly legal—and urgently necessary.
Should SCOTUS kill this version of student debt cancellation, the consequences have ramifications far beyond the $10,000 or $20,000 of relief per debtor. The president promised millions of people he would cancel some or all of their debt. Debtors’ expectations have been raised, and their anger stoked. How and in what direction will that anger be channeled? If SCOTUS blocks Biden’s cancellation policy, the $1.9 trillion of outstanding student debt will remain, leaving millions of lives hanging in the balance.
Such a decision would also set a new precedent for standing—the legal test for determining whether parties have the right to bring a claim. If the Supreme Court throws out the challenges to Biden’s program, that probably won’t be because they believe the president’s program is merited but because they have deemed the right-wing plaintiffs to lack standing—that is, legitimate grounds—to sue. The Missouri attorney general is claiming that debt cancellation will cause the Missouri Higher Education Loan Authority (MOHELA)—a loan servicing entity—to lose money, threatening its ability to repay an old debt MOHELA owes Missouri.
In 2007, the State of Missouri passed legislation requiring MOHELA to pay $350 million into a reserve fund, called the Lewis and Clark Fund. This fund was intended to help finance capital development for the state’s universities. In exchange for its contributions to the fund, MOHELA was granted access to the state’s tax-exempt bonding authority, allowing MOHELA to cheaply borrow money to issue more student loans. Between 2007 and 2008, MOHELA paid $245 million toward its obligations, but stopped thereafter. By 2010, federal changes to the student loan program meant that student loan servicers could no longer originate loans—that became the role of the federal government. As a result, MOHELA no longer benefited from access to Missouri’s tax-exempt bonding authority. Since MOHELA’s last payment in 2008, Missouri has forgone its prerogative to collect on its remaining $105 million debt; in 2017, it granted MOHELA a payment extension until 2024.
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The irony is cutting: An old, debt owed by a collection agency to the state of Missouri may be the downfall of debt cancellation for millions. It’s also worth noting that MOHELA itself—which both sides agree would have standing—has declined to join the suit. If the justices grant Missouri’s arguments, that itself will signal a major change in when and how plaintiffs can claim standing, enabling third parties to sue on behalf of someone else. Under this precedent, if I loan five bucks to my friend who works at Amazon and then she gets laid off, I could sue Amazon for getting in the way of my five bucks’ coming back to me.
More broadly, if the Supreme Court holds that Missouri has standing, it will effectively be sanctioning the “lawfare”—the use of legal systems and principles against an enemy—of red states against a blue president. The fate of student debt cancellation is a battle in a bigger war between an imperial judiciary, an executive branch that is struggling to execute, and a gridlocked Congress. Invoking the “major questions doctrine”—the conservative judicial philosophy favored by this court—the conservative justices wondered if a decision involving half a trillion dollars and 43 million Americans needed a congressional permission slip, an additional safety measure beyond the plain authority that Congress has granted the Department of Education to modify and waive student debt.
But the major questions doctrine is notoriously subjective; justices appear to be unable to cite any objective metric for what constitutes a major question and what does not. For student debt relief, the sheer size of the dollar amount represented by cancellation seemed to be the test. Yet the justices have failed to understand that the debt has already been issued, the money has already been spent. When Congress authorized the 1965 Higher Education Act, which enabled the federal government to issue loans, it put the Department of Education on the path to becoming the country’s biggest consumer bank. Canceling debt is any creditor’s prerogative. The justices’ concerns over the department’s ability to cancel its own debt is akin to expressing surprise that an electrician has installed lights that can be turned off, in addition to turned on.
Equally strange is the notion—touted by conservatives and moderates alike—that using executive authority to cancel debt is a slippery slope to authoritarian overreach. But executive action is designed precisely to implement, swift, critical measures to benefit the public—taking millions of people out of poverty, for example. There’s a clear difference between an executive action that liberates millions from unnecessary harms and one that restricts liberties. Canceling student debt is not necessarily the prelude to internment camps.
Perhaps most importantly, treating student debt cancellation as already dead overlooks the fact that, should the Supreme Court block Biden’s proposal, the president has multiple other means available to cancel debt. The president need not be wholly circumscribed by six conservative justices, nor his initial policy attempt. He could use the Department of Education’s more explicit powers to cancel debt, such as those authorized by the Higher Education Act—the law that allows the Department of Education to issue student loans. Canceling debt under this provision is both legal and normal. Should the Biden administration chose to cancel debt under another means, swift and decisive action will be necessary. Although legal challenges will no doubt arise in response to future cancellation efforts, it will be much harder—legally practically, and politically—for the courts to reimpose a debt that the president has already canceled. Is the administration ready to play to win?
Pronouncing debt cancellation already dead takes the Supreme Court’s words as the last word—precisely at the moment when the court’s authority demands challenge, not complacency. Tuesday’s hearing wasn’t the end of the student debt cancellation. It was merely the Supreme Court’s first meeting about debt abolition. The work—and the fight—continues.
