Court strikes down student loan plan

Jun. 30—The U.S. Supreme Court invalidated President Joe Biden's student loan forgiveness plan on Friday, and Show Me State interests are a key factor in the case.

In Biden v. Nebraska et al., the court held that the Higher Education Loan Authority of the State of Missouri, a corporation based in a suburb of St. Louis that is owned by the state government, sustained injury when Biden acted to forgive $10,000 for every borrower who owes money to the U.S. Department of Education. Recipients of the Pell Grant, who qualify based on low income, could've received up to $20,000 of forgiveness.

The Loan Authority is commonly referred to as MOHELA. Its involvement in the case is a critical component of the question of standing, or legal permission to sue under Article III of the U.S. Constitution, according to Professor Kevin Vance.

"It's interesting that if it wasn't for the State of Missouri in this case, it's not clear which party would have actually had standing," said Vance, the director of the Center for Constitutional Liberty of Benedictine College in Atchison, Kansas. "They expressed some skepticism that the other states that were involved in this suit, including Nebraska — which the case is named for — had standing. So, the only clear-cut case for the (court) was Missouri because of this kind of unique institution."

MOHELA collects owed money for the department and is paid service fees. Thus, Supreme Court Chief Justice John Roberts wrote, when the Office of the Missouri Attorney General, then led by Republican Eric Schmitt, sued Biden on the corporation's behalf, in partnership with five other states, Missouri obtained standing.

"I'm proud to have brought this case as Missouri's Attorney General and save taxpayers a half trillion dollars," Schmitt said in a social media statement. He has served in the U.S. Senate since January.

Roberts, writing for the 6-3 majority, said the U.S. government conceded that Biden's plan would cost MOHELA $44 million per year in service fees. Biden can't do this without specific permission from Congress via legislation, Roberts wrote.

"All this leads the Court to conclude that the basic and consequential tradeoffs inherent in a mass debt cancellation program are ones that Congress would likely have intended for itself," he wrote.

The ruling appears to have come down on ideological lines. The majority consists of appointees by Republican presidents George H.W. Bush, George W. Bush and Donald Trump siding against the three appointees of Democratic presidents Barack Obama and Biden. Like all federal judges, those on the Supreme Court are not members of any party, but the six ruling with the majority are generally considered conservative, and the other three are typically considered liberal.

Justice Elena Kagan, an Obama appointee, wrote the dissent. She argued that because Missouri merely owns MOHELA and leaves it to be run independently of the state government, MOHELA itself must sue for the case to be valid. Missouri officials' belief that the program is a "bad idea" is not enough for a lawsuit to be filed, she said.

"The plaintiffs in this case are six states that have no personal stake in (Biden's) loan forgiveness plan," Kagan wrote. "They are classic ideological plaintiffs: They think the plan a very bad idea, but they are no worse off because the (Biden administration) differs. In giving those States a forum — in adjudicating their complaint — the Court forgets its proper role."

The nine justices serve life terms, or until they each decide to retire. The student loan case is the last to be heard before the current Supreme Court "term," meaning the justices will take a break for the summer and return in the fall to hear more cases.

On Friday afternoon, Biden initiated a new process to potentially forgive student debt through the Higher Education Act of 1965, which is a different law from the HEROES Act of 2003, which affected the Biden v. Nebraska et. al case. Biden called the Friday ruling a mistake and vowed to continue his efforts on behalf of financially troubled student borrowers.

"This fight isn't over," Biden said Friday in a social media statement.

Marcus Clem can be reached at marcus.clem@newspressnow.com. Follow him on Twitter: @NPNowClem