Supreme Court Filings Reveal Case For, Against Debt Forgiveness

• The Supreme Court has agreed to hear a case that will decide the fate of Biden's debt forgiveness plan in February.
• Biden's debt relief plan relies on the 2003 HEROES Act, which allows the federal government to change student loan programs in response to national emergencies.
• Through amicus briefs, 23 states now oppose the president's plan for debt cancellation.

Even before the U.S. Supreme Court agreed to fast-track a challenge to President Joe Biden's federal student loan forgiveness plan, battle lines were being drawn through amicus curiae briefs filings in the case.

The legal statements and arguments fall on both sides of the lawsuit, which involves six Republican-led states and has already blocked the implementation of the president's plan.

More states have now weighed in, while advocacy groups show support for Biden and the Department of Education (ED).

Most notably, a coalition of 17 additional states filed a joint brief in support of blocking forgiveness.

Those states included:

Here are additional insights the recently filed amicus briefs provide on how each side might argue their case.

Debt Relief Hinges on HEROES Act

Each amicus brief spends a significant amount of time focused on the Higher Education Relief Opportunities for Students (HEROES) Act originally passed in 2002 that became law in 2003.

The law allows the secretary of education to "waive or modify" student financial assistance programs for those who have "suffered direct economic hardship as a direct result of a war or other military operation or national emergency."

Biden's administration invoked this law when it vowed to cancel up to $20,000 per borrower. The president said the COVID-19 pandemic qualifies as a national emergency, so the HEROES Act applies.

From the beginning, Biden stated that borrowers have become reliant on the payment pause in the wake of the pandemic. Therefore, resuming payments without discharging some loan amounts will likely lead to an influx of loan defaults and leave borrowers in a worse position than before the emergency.

In late September, Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina sued to block the plan, alleging that Biden's plan to wipe out wide swaths of student debt will cost them revenue from servicing loans and taxes. They also claim that the Department of Education (ED) doesn't have the authority to carry out the plan.

A district court judge later tossed the lawsuit, ruling that the six states didn't have standing to sue. However, an appeals court in late October sided with the plaintiffs, blocking Biden’s program and causing ED to yank the online application for debt forgiveness.

Biden last month extended a pause on federal student loan payments to July 2023. At the time, he said the extension would allow the Supreme Court time to make a ruling in the case.

The Case for Using the HEROES Act

One amicus brief of potential importance came from former Congressman George Miller, described as one of the "chief architects" of the 2003 HEROES Act and other associated versions of the bill.

In his brief, he stressed the part of the HEROES Act that states ED has the power to waive federal student loan requirements to "ensure that" borrowers affected by national emergencies "are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals."

Miller's central argument is that the HEROES Act gives ED broad authority to change loans. The law does not limit how impactful the department's actions can be.

"When passing the HEROES Act of 2003, lawmakers continued to emphasize the breadth of discretion that it gave the secretary," Miller wrote in his brief.

Another brief from borrower advocacy groups and legal aid organizations, led by the Student Borrower Protection Center, emphasizes that borrowers will be harmed if forced to resume loan payments without relief.

"Given the financial impacts of COVID-19, working and middle-class borrowers face the prospect of widespread delinquency and defaults when repayment begins," the brief states. "History confirms this."

Advocates point to historical evidence that "new defaults spiked as a result of disaster-impacted borrowers exiting forbearance statuses," according to the brief.

The Case Against the HEROES Act

The prevailing argument against ED's ability to invoke the HEROES Act to cancel large swaths of debt is the idea that this power should belong to Congress alone.

An amicus brief from Americans for Prosperity, a conservative think tank founded by the Koch brothers, argues this exact point. It traces back to the enduring analogy that Congress does not "hide elephants in mouseholes," which means acts from Congress aren't meant to give other agencies sweeping powers unless those powers are explicit.

"If Congress wanted to grant the Department [of Education] unfettered (and unconstitutional) legislative power to mass cancel student debt, it would have clearly said so," Americans for Prosperity wrote in the brief.

The group also argues that the HEROES Act grants ED the ability to "waive or modify" requirements. If Congress wanted to grant the ability to forgive or cancel debt, it would have expressly stated this as it had in creating other debt cancellation programs, such as Public Service Loan Forgiveness (PSLF).

Americans for Prosperity's brief adds that the HEROES Act passed in the wake of the 9/11 terrorist attacks, which is the backdrop the court should interpret the law under.

The amicus brief from the coalition of 17 states adds that debt cancellation is a power of "vast economic and political significance." It argues that the Supreme Court has stated in the past that agencies do not have the authority to carry out such actions on their own, as it recently decided in a 2022 case involving the Environmental Protection Agency.

"The [Supreme] Court presumes that 'Congress intends to make major policy decisions itself, not leave those decisions to agencies,'" the brief states. "That presumption applies here."