Biden v. Nebraska

600 U.S. 477 (2023)

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Nature of the Case

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Facts

To ensure that Americans could keep up with increasing international competition, Congress authorized the first federal student loans in 1958-up to a total of $1,000 per student each year. Outstanding federal student loans now total $1.6 trillion extended to 43 million borrowers. The terms of federal loans are set by law, not the market, so they often come with benefits not offered by private lenders. Such benefits include deferment of any repayment until after graduation, loan qualification regardless of credit history, relatively low fixed interest rates, income-sensitive repayment plans, and-for undergraduate students with financial need-government payment of interest while the borrower is in school. The Education Act specifies in detail the terms and conditions attached to federal loans, including applicable interest rates, loan fees, repayment plans, and consequences of default. The Secretary can cancel a set amount of loans held by some public servants-including teachers, members of the Armed Forces, Peace Corps volunteers, law enforcement and corrections officers, firefighters, nurses, and librarians-who work in their professions for a minimum number of years. The Secretary can also forgive the loans of borrowers who have died or been “permanently and totally disabled,” such that they cannot “engage in any substantial gainful activity.” Bankrupt borrowers may have their loans forgiven. The Secretary is directed to discharge loans for borrowers falsely certified by their schools, borrowers whose schools close down, and borrowers whose schools fail to pay loan proceeds they owe to lenders. Congress enacted the HEROES Act of 2001. That law provided the Secretary of Education, for a limited period of time, with “specific waiver authority to respond to conditions in the national emergency” caused by the September 11 attacks. Congress extended the Act and now the Secretary “may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the [Education Act] as the Secretary deems necessary in connection with a war or other military operation or national emergency.” An “affected individual” is defined, in relevant part, as someone who “resides or is employed in an area that is declared a disaster area by any Federal, State, or local official in connection with a national emergency” or who “suffered direct economic hardship as a direct result of a war or other military operation or national emergency, as determined by the Secretary.” And a “national emergency” for the purposes of the Act is “a national emergency declared by the President of the United States.” The Secretary took more significant action in response to the COVID-19 pandemic. The President declared the pandemic a national emergency. Secretary of Education Betsy DeVos announced that she was suspending loan repayments and interest accrual for all federally held student loans. Congress required the Secretary to extend the suspensions through the end of September 2020. The secretary further extended the suspensions, broadened eligibility for federal financial assistance, and waived certain administrative requirements. In August 2022, a few weeks before President Biden stated that “the pandemic is over,” the Department of Education announced that it was once again issuing “waivers and modifications” under the Act-this time to reduce and eliminate student debts directly. The plan canceled roughly $430 billion of federal student loan balances, completely erasing the debts of 20 million borrowers and lowering the median amount owed by the other 23 million from $29,400 to $13,600. Ps sued, arguing that the HEROES Act does not authorize the loan cancellation plan. Ps moved for a preliminary injunction, claiming that the plan exceeded the Secretary’s statutory authority. Ps moved for a preliminary injunction, claiming that the plan exceeded the Secretary’s statutory authority. The District Court held that none of the States had standing to challenge the plan and dismissed the suit. On appeal, the court held that Missouri likely had standing through the Missouri Higher Education Loan Authority (MOHELA or Authority). It further concluded that the State’s challenge raised “substantial” questions on the merits and that the equities favored maintaining the status quo pending further review. D appealed.