Facts
- In March 2020, the President declared the COVID-19 pandemic a national emergency.
- Relying on the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, the Secretary of Education suspended repayment obligations and interest accrual for federally held student loans during the emergency.
- Congress later enacted legislation requiring the Secretary to extend those suspensions through the end of September 2020.
- In August 2022, the Secretary announced a new, nationwide debt-relief program for federal student-loan borrowers.
- The program would cancel up to $10,000 in federal student-loan debt for eligible borrowers and up to $20,000 for eligible Pell Grant recipients, subject to income limits.
- The Secretary estimated the program would cancel roughly $430 billion in loan principal, fully canceling balances for about 20 million borrowers and reducing balances for millions more, with major fiscal and economic effects.
- Six States—Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina—sued the President, the Secretary, and the Department of Education, alleging the HEROES Act did not authorize this level of debt cancellation and that the program exceeded the Executive Branch’s authority.
- The United States District Court for the Eastern District of Missouri dismissed the suit for lack of Article III standing and denied preliminary relief.
- The Eighth Circuit issued a nationwide preliminary injunction blocking the program.
- The Supreme Court granted certiorari before judgment to review (1) standing and (2) whether the program was authorized by statute.
Issues
- Whether at least one State plaintiff had Article III standing to challenge the student-loan cancellation program, including whether Missouri could rely on financial harm to the Missouri Higher Education Loan Authority (MOHELA).
- Whether the HEROES Act’s authority to “waive or modify” Title IV statutory and regulatory provisions authorized the Secretary to cancel hundreds of billions of dollars in student-loan principal for tens of millions of borrowers.
- Whether, given the program’s economic and political importance, the Secretary needed clear congressional authorization to implement it.
Decision
- The Supreme Court reversed the district court’s judgment and remanded.
- The Court held that Missouri had Article III standing because the program would likely cause MOHELA—an entity created by Missouri to service and hold student loans—to lose servicing fees, a concrete financial injury fairly traceable to the program and redressable by an injunction.
- On the merits, the Court held that the HEROES Act did not authorize the Secretary’s program.
- The Court read “waive or modify” as allowing adjustments to existing statutory or regulatory requirements, not the creation of a new, across-the-board principal-cancellation program.
- The Court emphasized that Congress had provided specific, limited loan-discharge authorities in the Higher Education Act, which cut against reading the HEROES Act’s emergency language as a blanket grant to cancel debt on this scale.
- Applying the major questions doctrine, the Court concluded that canceling about $430 billion in debt for a large share of borrowers required clear authorization from Congress, which the HEROES Act did not provide.
Legal Principles
- A plaintiff must show (1) a concrete, particularized injury in fact, (2) fairly traceable to the challenged action, and (3) likely to be redressed by the requested relief.
- A State may establish standing based on financial injury to a state-created instrumentality when the State is sufficiently connected to the entity and the challenged federal action predictably causes the entity monetary loss.
- Statutory authority to “waive or modify” generally permits limited changes to existing legal requirements; it does not, without clear direction, authorize an agency to cancel legal obligations on a sweeping scale.
- When an agency asserts authority to resolve an issue of major economic and political importance, courts look for clear congressional authorization; broad or general statutory terms are not read to confer that power absent a clear statement.
- Emergency statutes are interpreted in light of their text and structure; an emergency delegation does not automatically permit measures that restructure a federal program beyond what Congress clearly allowed.
Conclusion
In Biden v. Nebraska, the Supreme Court held that Missouri had standing based on predicted financial harm to MOHELA and ruled that the HEROES Act did not give the Secretary of Education authority to implement the 2022 mass student-loan principal cancellation program, so the plan could not lawfully take effect.