Supreme Court considers fate of Biden's student loan relief plan

Chief Justice John Roberts made clear that he saw the student debt forgiveness as an important opportunity for the court to further flesh out its "Major Questions Doctrine."

"I just wonder, given the posture of the case and given our historic concern about the separation of powers, 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?" Roberts said.

Remember: Under the “Major Questions Doctrine," if an agency acts in a way that could have major political or economic implications, it must have the authority of Congress. The states are saying here that essentially, the college debt relief plan is too big for the Biden administration to use the authority in its citing.

Justice Neil Gorsuch asked whether the Biden administration considered the cost to people who are not eligible for the proposed student loan forgiveness program because they don't have student loans.

The plaintiffs said that missing from the government's analysis, Gorsuch said, is the "cost to other persons in terms of fairness, for example, people who've paid their loans... and people who are not eligible for loans in the first place."

More context: Americans who did not go to college or already paid off their student loans won’t see a direct benefit from Biden’s program, which the Congressional Budget Office has estimated will cost $400 billion over time. Also, a one-time cancellation of federal student loan debt does nothing to bring down the cost of college for future borrowers.

About 81% of households who earn less than $125,000 a year don’t have student loan debt, according to an analysis done last year by Matthew Chingos, vice president of education data and policy at the Urban Institute. He based the estimation on the 2019 Survey of Consumer Finances conducted by the Federal Reserve.

Justice Neil Gorsuch brought up the court's decision in 2019 that blocked former President Donald Trump's plans to add a citizenship question to the census. Chief Justice John Roberts joined the court's then-four liberals to rule in favor of the question's challengers and that ruling is one of the cases that the opponents to student debt relief are citing to back their standing arguments.

Gorsuch noted Tuesday that the court said in the census case, that the potential undercount of the citizenship question would cause New York established standing for New York to bring that case, because an undercount would have cost New York federal funding and a loss in other benefits.

Prelogar said that in the census case the injury that would have been caused by an undercount was more direct, and that in the student debt case, the financial injuries the states were claiming were "self inflicted."

RELATED: Exclusive: How John Roberts killed the census citizenship question

The so-called "Major Questions Doctrine" is already seeing a lot of attention as the red states’ case is debated before the justices on Tuesday.

But what exactly is it?

Last term, the court cited the “Major Questions Doctrine” in a 6-3 decision that curbed the Environmental Protection Agency’s ability to broadly regulate carbon emissions from existing power plants.

Under the theory, if an agency acts in a way that could have major political or economic implications, it must have the authority of Congress. The states are saying here that essentially, the college debt relief plan is too big for the Biden administration to use the authority in its citing.

It's an argument that will appeal to the court's conservatives and their 6-3 majority over the liberals. Justice Samuel Alito, for instance, brought it up.

“Well, of course, we think Congress did address this expressly here. And Congress directed that in the context of a national emergency – that is the limitation of the HEROES Act.” Prelogar replied.

“The (Education) secretary acted within the heartland of his authority and in line with the central purpose of the HEROES Act in providing that relief here. To apply the Major Questions Doctrine to override that clear text will deny borrowers critical relief that Congress authorized and the secretary deemed essential,” Prelogar said.

Chief Justice John Roberts drew attention to the fact that the Biden administration wants to use a power to "modify" federal student loan programs in order to cancel roughly $400 billion in debt.

"In an opinion we had a few years ago by Justice (Antonin) Scalia, he talked about what the word 'modify' means, and he said 'modified' in our view connotes moderate change," Roberts said.

"We're talking about half a trillion dollars and 43 million Americans. How does that fit under the normal understanding of modified?" Roberts asked.

The Biden administration argues it has the power to cancel federal student loan debt under a 2003 law called the HEREOS Act. But the law does not explicitly say the secretary of education has the power to cancel or forgive student loan debt.

Instead, the law says the secretary of education has the power to “waive or modify” a federal student loan program in order to ensure that individuals “are not placed in a worse position financially” because of “a war or other military operation or national emergency.”

US Solicitor General Elizabeth Prelogar argued that in the context of the statute, "modify has to mean making a change up to the point of wholesale elimination."

"It would be really strange for Congress to say you can eliminate obligations altogether or tweak them just the littlest bit. But you can't do anything in between," she said.

It did not take long for the issue of so-called "standing" to come up in Tuesday's arguments on the student loan relief program.

What does this mean? "Standing" refers to the harm a plaintiff must show they are facing in order for a court to intervene. The Biden administration argues that the challengers in the student debt forgiveness case have not overcome this procedural threshold, meaning that the Supreme Court could reject their case without even getting into the legal merits of the relief program.

Justice Samuel Alito dug in on the issue in questions to US Solicitor General Elizabeth Prelogar and signaled that he was sympathetic to the argument that the states suing the administration had established standing. He pointed specifically to Missouri's claim that that the revenue shortfalls the Biden action could cause the Missouri Higher Education Loan Authority (MOHELA) — an entity that was created by the state to service student loans — could cause knock-on financial harms to Missouri itself.

Justice Ketanji Brown Jackson ultimately jumped in, to back up an argument Prelogar was making: that the financial interests of Missouri and MOHELA were not sufficiently entangled to give Missouri standing.

Justice Clarence Thomas kicked off the oral arguments with the first round of questions, asking US Solicitor General Elizabeth Prelogar how the mass loan forgiveness amounts to the terminology used in the relevant statute.

"Would you take a minute to explain how a waiver or modification amounts to a ...cancellation," Thomas said.

The Biden administration's foes in the case say that the terms "waive" or "modify" in the law giving the Education secretary certain powers applies to smaller bore actions to adjust repayment plants, rather than a blank cancellation of classes of debt.

Prelogar told Thomas that the law in question, the HEROES Act, contemplates many forms of action an Education secretary could take in the face of a national emergency.

Congress was trying to “cover the field” to give the secretary tools to respond to a national emergency, she said.

The Supreme Court is now hearing oral arguments on two challenges to President Joe Biden’s student loan forgiveness program – an initiative aimed at providing targeted debt relief to millions of student-loan borrowers – that has so far been stalled by legal challenges.

Republican-led states and conservatives challenging the program say it amounts to an unlawful attempt to erase an estimated $430 billion of federal student loan debt under the guise of the pandemic.

At the heart of the case is the Department of Education’s authority to forgive the loans. Several of the conservative justices have signaled in recent years that agencies – with no direct accountability to the public – have become too powerful, upsetting the separation of powers. They have moved to cut back on the so-called administrative state.

Tuesday’s cases will also highlight an important threshold question that could block the court from reaching the merits of the dispute: whether the parties behind the challenge have the legal right, or “standing,” necessary to bring suit.

What both sides are arguing: The Biden administration argues that the secretary of education had the clear authority to provide the relief to borrowers making less than $125,000 per year ($250,000 for households) in 2020 or 2021 in order to protect them from financial harms brought on by the pandemic such as the inability to buy food or make rent or mortgage payments.

As for the states, Nebraska Attorney General Michael T. Hilgers, who is also representing Missouri, Arkansas, Iowa, Kansas and South Carolina, stressed that the Biden administration exceeded its authority by using the pandemic as a pretext to mask the true goal of fulfilling a campaign promise to erase student-loan debt.

Desiree Veney, a senior at Morgan State University who qualified for potential loan forgiveness, said history is being made today.

Crowds of people are outside the US Supreme Court Tuesday ahead of oral arguments in two cases that could decide the fate of President Joe Biden's student loan forgiveness program.

"It's a very important day in history for not only me and also my peers," she told CNN.

Veney, who is also the vice president of her college's NAACP chapter, is from Harrisburg, Pennsylvania, but attends school in Maryland. This means she pays a lot more than some other students for out-of-state tuition, something she said will leave her at a disadvantage when she graduates.

Student debt has also prevented students at historically Black colleges and universities specifically from being able to invest or purchase homes, Veney said, expanding the racial wealth gap.

Debt forgiveness would be an "opportunity to create a stronger and a more stable foundation for my family and to create generational wealth afterward," she said, adding that it would give her more financial security after graduation and help further continue her education.