How the Supreme Court may approach Biden's student-loan forgiveness plan

• The Supreme Court will hear oral arguments on Tuesday on Biden's student-loan relief plan.
• Supporters say the relief is lawful, while opponents say Biden's policy is unconstitutional.

The showdown over President Joe Biden's student-loan forgiveness will play out at the Supreme Court on Tuesday in two closely watched cases that could determine whether millions of borrowers will have their debt wiped clean.

The court's rulings could either deal a major blow or victory to Biden, whose plan would eliminate up to $20,000 in federal loans for borrowers earning under $125,000 annually.

Court observers and advocates on both sides plan to tune into Tuesday's oral arguments, which could signal how the justices are thinking about the cases. Questions on whether the parties were harmed by Biden's debt cancelation, for example, could indicate that the court may decide the dispute on narrow grounds rather than rule on the legality of relief, they told Insider.

Supporters say Biden's plan would provide much-needed financial relief to the 43 million Americans who took out loans for their higher education, and particularly help communities that are likely to default on their debt and continue to be disproportionately affected by the COVID-19 pandemic, namely low-income, Black, Latino and Native American.

On the other hand, opponents insist Biden's plan would have massive legal implications for the president's authority and pose economic consequences, pointing to the Congressional Budget Office's estimated $400 billion cost to the federal government over the next 30 years.

The arguments

The challengers – six Republican-led states and two federal borrowers – argue that Biden overstepped his power by enacting sweeping debt cancellation without approval from Congress.

If Congress doesn't have a say, that "would be really troubling for our ability to govern ourselves," said Casey Mattox, vice president for legal and judicial strategy at Americans for Prosperity, a libertarian-leaning advocacy group that filed a court brief backing the challengers.

"It creates a circumstance going forward where future presidents are going to say, 'Well, what's the thing that I can do to likewise, you know, help me at the ballot box or with a certain constituency or whatever?'" Mattox added.

The Biden administration has defended that the plan falls under the president's legal authority, claiming the HEROES Act, a federal law enacted in the aftermath of the 9/11 terrorist attacks, allows the education secretary to waive or modify student-loan balances amid a national emergency. In this case, that's the COVID-19 pandemic.

"The harms of the COVID-19 pandemic are ongoing," Pilar Whitaker, special economic justice counsel at the Legal Defense Fund, said. "This relief is appropriate and it is tailored to those who most need it."

How the court could approach the cases

The Supreme Court will review two questions: whether the challengers have standing – the power to block Biden's relief by showing they suffer an injury from it – and whether the plan exceeds the administration's power.

South Texas College of Law professor Josh Blackman anticipates that the justices will focus plenty of their questions during oral arguments on standing, which could determine whether the challengers are successful or have their bids tossed out.

"What's unique about this policy is you're not hurting people. You're doing the opposite. You're helping them, you're removing their debt," Blackman said. "So the parties have to get creative with standing here, which is really the biggest hurdle."

In the first case the justices will hear on Tuesday, the GOP-led states – Arkansas, South Carolina, Iowa, Kansas, Nebraska, and Missouri – argue that Biden's relief would hurt their tax revenues, along with the revenue of Missouri-based student-loan company, MOHELA. The states claim that MOHELA will lose revenue from servicing loans because of Biden's relief.

Yet the Biden administration says the states lack standing because they can only claim "alleged harms" – not concrete – and MOHELA isn't a part of their lawsuit.

The Biden administration also argues the two borrowers in a separate challenge lack standing. Alexander Taylor and Myra Brown sued the Biden administration because they weren't eligible for full relief under the plan. Taylor claims he didn't qualify for the total $20,000 in relief since that applies to Pell Grant recipients, and Brown has borrowed commercially held loans, which don't qualify for any relief.

The borrowers, backed by a conservative group, argue that Biden's plan violates the Administrative Procedure Act's notice-and-comment procedure, a federal statute that requires agencies to justify rulemaking to the public and give them an opportunity to comment.

"Their argument is simply that they want more relief than what they're getting, but getting rid of the program doesn't solve that problem," said Genevieve Bonadies Torres of the Lawyers' Committee for Civil Rights Under Law, which filed a court brief supporting Biden's plan.

If the court ultimately decides that neither of the challengers have standing, the cases would effectively be dismissed, clearing the way for Biden's policy to be implemented, according to legal experts.

But the justices could instead base their discussion on Tuesday and the eventual rulings around Biden's authority to enact broad debt cancelation, deciding whether the plan can take effect or not.

"They're on the Supreme Court. They'll do what they want to do," Jonathan Glater, a professor at the University of California, Berkeley School of Law, who signed on to a court brief that backed the debt relief.

Still, he added, with at least an hour devoted to oral arguments in each case, expect time to be spent on both the standing and substance questions.

Concerning the constitutionality of Biden's plan, advocates on both sides say they feel confident their respective views will prevail at the Supreme Court.

"I think they will have standing," Mattox said. "I think that there's very little likelihood that the court reaches the merits of the case and actually says, 'This is within the power of the agency under the HEROES Act.'"

However, Torres, of the Lawyers' Committee for Civil Rights Under Law, that supports Biden's plan, said "the law and the facts are on the side of the debt relief plan, and there should be a favorable ruling to the Biden administration."

Millions of borrowers have already applied for the loan forgiveness Biden announced in August, but lower courts have temporarily paused the plan from taking effect. The Supreme Court is expected to hand down its decisions by June.