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A little more than a year ago, in Biden v. Nebraska (2023), the Supreme Court struck down one of the Biden administration’s student loan forgiveness plans. The Court’s decision took extraordinary liberties with the law, misreading a statute that clearly authorized the plan and relying on a doctrine known as “major questions.”
The major questions doctrine, as I’ve previously explained at length, has no basis in any federal statute or constitutional provision, and appears to be entirely made up by the Court’s right flank. Some defenders of the doctrine claim that it traces back to a 2000 Supreme Court decision, but the very strong version of the major questions doctrine that the Republican justices often invoke to block President Joe Biden’s policies did not emerge until he became president.
In applying the doctrine in Nebraska, however, the Court struck down just one of multiple programs the Biden administration created to reduce student loan burdens. Now, in a case known as Alaska v. Cardona, a trio of red-state attorneys general are asking the Supreme Court to neutralize much of a separate student loans plan which relies on an entirely different statute to justify its existence. (The “Cardona” in this case is Secretary of Education Miguel Cardona.)
The plan at issue in the Alaska case is known as the Saving on a Valuable Education or “SAVE” plan. Estimates of its costs vary, and they range from $137.9 billion over the course of a decade to about three times that amount. Republicans object to the cost of the SAVE plan. The plaintiffs challenging the plan rely heavily on Nebraska, and on the major questions doctrine at the heart of that case, in their brief to the justices.
The Alaska case arises on the Court’s “shadow docket,” a mix of emergency motions and other matters which the Court can decide on an expedited basis. So a decision in the Alaska case will probably be handed down soon.
In its brief to the justices, the Biden administration offers a few persuasive reasons why the Court should stay its hand. But, frankly, after Nebraska, it is difficult to determine whether legal arguments play any role in the student loans cases the Supreme Court takes. The decision in Nebraska was so egregious — so lacking in respect for statutory text — that it’s far from clear whether any student loans plan created by this Democratic administration can receive a fair hearing in this GOP-controlled Supreme Court.
What’s at stake in Alaska
The immediate stakes in the Alaska case are somewhat smaller than those in Nebraska. The program at issue in the latter case would have outright canceled at least $10,000 in student loans for student borrowers who earned less than $125,000 a year. The program at issue in Alaska, the SAVE plan, is more complicated. It has three parts, and only one of those parts is currently before the justices (although challenges to the other two parts are likely to make their way up to the Court eventually).
The SAVE plan makes three significant changes to something known as “income contingent repayment plans.” Under these plans, a certain amount of every borrower’s income is protected from student loan repayments.
Before the SAVE plan, a borrower earning up to 150 percent of the federal poverty rate (about $22,000 for a single person with no dependents) did not have to make student loan payments. And borrowers who earned more than this amount could subtract the amount from their income when determining how much they owed. The SAVE plan increases the amount of income protected from student loan repayments to 225 percent of the poverty rate (or just under $33,000 a year for a single-income earner with no dependents).
Additionally, before the SAVE plan, student loan repayments were capped at 10 percent of each borrower’s remaining income. The SAVE plan lowers that cap to 5 percent.
Finally, before the SAVE plan, borrowers could have their loans forgiven after making payments for 20 to 25 years. The SAVE plan accelerates this schedule, allowing some borrowers to have their loans forgiven after only 10 years.
The specific issue before the Supreme Court right now is whether the second of these three changes — the decision to lower the cap from 10 percent to 5 percent — is authorized by federal law. The other two parts of the SAVE plan are likely to come before the justices eventually.
The biggest obstacle to the SAVE plan is the Court’s decision in Nebraska
To defend the provision of the SAVE plan at issue in Alaska, the Biden administration primarily points to a federal law that provides that income-contingent loans “shall require payments that vary in relation to the appropriate portion of the annual income of the borrower (and the borrower’s spouse, if applicable) as determined by the Secretary.” That language provides strong support for the proposition that the secretary of Education, and not the Supreme Court, gets to determine what percentage of a borrower’s income must be repaid each year.
In Nebraska, however, the six Republican justices in the majority seemed to divorce its analysis of student loan policy entirely from the text of federal law.
The student loan policy in Nebraska was authorized by a law known as the Heroes Act, which gives the Education secretary broad authority to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs … as the Secretary deems necessary in connection with a war or other military operation or national emergency.” The Biden administration pointed to the Covid pandemic as a “national emergency” that triggered the Heroes Act.
This one provision of the Heroes Act alone should have been enough to justify the student loan forgiveness program at issue in Nebraska, but that law also contained other provisions which should have removed any doubt that the Education secretary had the power to create the loan forgiveness program that the Republican justices struck down.
Among other things, the Heroes Act waived a lengthy process known as “notice and comment” that federal agencies normally must undergo before changing federal policy. It provided that the secretary may dole out loan forgiveness en masse (“the Secretary is not required to exercise the waiver or modification authority under this section on a case-by-case basis”). And the Heroes Act also instructed courts not to interpret other federal statutes to limit the secretary’s loan forgiveness authority unless that statute was “enacted with specific reference to” the Heroes Act.
It’s hard to imagine a statute, in other words, which more clearly signaled that the secretary should be allowed to cancel student loans during a national emergency, regardless of whether the political party that controls the Supreme Court agreed with the secretary’s decision.
Nevertheless, Nebraska reached the implausible conclusion that the student loan forgiveness program at issue in that case was not authorized by the Heroes Act. It also claimed that the program violated the so-called “major questions” doctrine.
The major questions doctrine — which, again, appears in no law or constitutional provision and was made up entirely by recent Supreme Court decisions — provides that Congress must “speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’”
The student loan forgiveness program in Nebraska would have wiped out hundreds of billions of dollars in student loan debt, so it plausibly concerned a matter of great economic significance. But even if one concedes this point, it’s still hard to conceive of a statute that speaks more clearly than the Heroes Act.
Congress gave the secretary broad authority. It waived the normal procedural constraints on the secretary. It explicitly gave him or her the power to dole out relief to many borrowers at a time. And it forbade courts from reading any federal statute to limit the secretary’s authority unless that statute specifically mentioned the Heroes Act.
The Nebraska decision, in other words, was so poorly reasoned that it raises serious questions about whether the Republican justices were interpreting the law in good faith. And that doesn’t bode well for the alternative student loans plan at issue in Alaska.
What are the best arguments for the plan at issue in Alaska?
Again, federal law provides that the Education secretary may determine the “appropriate portion of the annual income of the borrower” that should be repaid. That language provides very strong support for the student loan plan currently before the Court.
There’s also some doubt about whether the Court has jurisdiction over this case to begin with. No federal court may hear a lawsuit challenging a federal policy unless the plaintiff can show that they were injured in some way by that policy. The red-state plaintiffs essentially argue that they are injured because the SAVE plan will cause some borrowers who owe money to those states to pay back those loans more quickly, depriving the states of interest on the loans. (For complicated reasons, the states would be fully reimbursed, even if the borrower has a portion of their loans canceled.)
But it’s far from clear that a state is injured by having a loan repaid early — if the state wishes to earn interest income, it can always invest the repaid money in something else that pays interest. As the Biden administration says in its brief, “full repayment ‘would ordinarily be cause for celebration, not a lawsuit.’”
Finally, the Biden administration points to one significant difference between the SAVE plan and the plan at issue in Nebraska. In Nebraska, the Supreme Court faulted the Biden administration for creating what it claimed was a “novel and fundamentally different loan forgiveness program” than anything that had previously existed.
The SAVE plan, by contrast, does not create a novel program. It takes an existing program that capped student loan payments and exempted a certain amount of income from loan repayments, and simply lowered the cap and increased the amount of the exemption.
Will these arguments be enough to rescue the SAVE plan? Maybe in a Court that is interested in following the law. After Nebraska, however, it is far from clear that this Court cares to do so.
