Barrett Skeptical of States’ Standing to Bring Student-Loan Challenge
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Justice Amy Coney Barrett joined the liberal justices in grilling Nebraska solicitor general James Campbell on standing during Tuesday’s oral arguments, indicating that the court’s conservative bloc might be split on the question of whether six states are entitled to challenge the Biden administration’s student-loan executive order.
In August of last year, the Biden administration announced a plan that would cancel $10,000 in federal student-loan debt for those making less than $125,000 or households making less than $250,000 in income per year. Low-income borrowers would be eligible for an additional $10,000 in cancelation. The administration invoked the HEROES act to justify the plan, linking the Covid-19 pandemic to provisions in that act that apply under national emergencies.
A series of challenges to the plan have been initiated since then. The standing, or right to sue, of the challengers has been put in question in each case.
A lower court ruled in Biden v. Nebraska that the states hadn’t been injured and could not sue before the Eighth Circuit and later the Supreme Court intervened. This was the case the justices heard first on Tuesday.
While the states collectively addressed ways in which their finances would be negatively impacted, Missouri is one of the states suing on behalf of an affiliated loan servicer: namely, the Higher Education Loan Authority of the State of Missouri, or MOHELA — an independent corporation that has explicitly said it is not involved in the state’s challenge.
MOHELA is one of the largest holders and servicers of student loans in the country. The state of Missouri claims that it would lose servicing fees on federal loans that are discharged under President Biden’s order, speculating that it might fail to make the required payments to the state treasury. MOHELA has proved to be central to the standing debate in this case.
During Tuesday’s oral arguments, Barrett pressed Campbell, who was representing all six states before the Court, on the issue of Missouri’s right to join the suit, given that the loan servicer itself did not choose to challenge the administration.
“Do you want to address why MOHELA is not here?” Barrett asked.
“Why didn’t the state just make MOHELA come? [Solicitor General Elizabeth Prelogar] conceded that if MOHELA was here, MOHELA would have standing,” continued Barrett. “If MOHELA is an arm of the state, why didn’t you just strong-arm MOHELA and say you’ve got to pursue this suit?”
“That’s a question of state politics,” explained Campbell, adding that Missouri has the right to assert its interests in this case.
Justice Kagan then intervened to point out that documents had to be acquired from the loan servicer through circuitous channels.
“It’s true you couldn’t even get documents from MOHELA without filing the state equivalent of a FOIA request,” said Kagan. “I think that if MOHELA was willing to hand you over the documents, you wouldn’t have filed a state FOIA request.”
Zooming into the corporation’s independence, Justice Ketanji Brown Jackson asked whether there would have to be some kind of amendment to the structure of MOHELA in order for the state to get at its assets.
Campbell admitted that this would be the case.
Justice Neil Gorsuch then intervened to ask a question about the merits, but Barrett later returned to standing to hypothetically ask if Missouri could file suit on behalf of the city of St. Louis.
Campbell replied in the negative.
Prelogar began her rebuttal by focusing on standing. She followed up on Campbell’s admission to Jackson that Missouri would have to change the law and the structure of MOHELA to get at its assets.
“There’s absolute financial separation between the state and MOHELA,” Prelogar said, pointing out that the state hasn’t attempted to direct MOHELA to sue, nor could it.
She also raised doubts over Missouri’s argument that the loan cancellation would lead MOHELA to fail to make the required payments to the state treasury.
Finally, Prelogar insisted that there’s a slippery slope to ruling the states have standing here.
“There’s also a more fundamental legal problem with their theory: It has no logical stopping point. There’s nothing for example that would prevent anyone who’s owed a debt to say that suddenly they can have standing to challenge a regulation that doesn’t affect them in any way, because it might affect the debtor who will then be unable to make good on that liability,” Prelogar said.
“There’s no precedent in this court’s Article III doctrine to support that kind of broad expansion of Article III standing here,” Prelogar concluded.
