September 24, 2023

Frank Sotosanto just got a sense of what it would be like to be free of student loans.

Earlier this month, Sotosanto finished paying off his private student loans, which once totaled about $30,000 per step, saying he was only paying, collecting and paying interest on the other half of his student loans during the pandemic-era. Can be taken due to freeze. $16,900 he owes the federal government.

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In the weeks since getting rid of her personal loans, Sotosanto, 32, said her mood and stress levels have improved.

“It’s definitely a really good feeling,” to have less debt, he said. “I’m nearing the starting line of my life.”

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Sotosanto, a water resources engineer, struggles to find money to save for the future after making her student loan payments and covering her Portland, Ore, rent and other bills, before the pandemic-induced payment pause on government student loans Was doing. If the Biden administration’s plan to cancel up to $20,000 in student loans for a wide swath of borrowers survives legal challenges, Sotosanto will be virtually student loan-free; The government will discharge the $16,900 still outstanding in federal student loans. He received a Pell Grant, money the government provides to low-income students to attend college, and qualified for the full $20,000 in relief.

But if the Supreme Court rejects the debt cancellation program, Sotosanto said he will have to continue delaying his plans to secure the stability that comes with a college degree.

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Sotosanto said, “If the result was like that, I would be very upset.” “I have to wait several more years to be able to really start living my life and start saving for a house and save more for retirement and retire in my own house to have any kind of future. ”

For millions of borrowers like Sotosanto, the outcome of the cases before the court will have a meaningful impact on their financial lives, but, in addition, could have lasting legal consequences.

David Rubenstein, a professor at Washburn University School of Law, said of the student loan suit, “It raises legal questions that go beyond this case.” “The stakes are really quite high,” for the borrowers, the Biden administration and the law more broadly.

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While the court likely won’t issue its ruling until June, debt collectors and court-watchers can get a sense of what the two key legal questions in the cases will be like when attorneys present their oral arguments in nine Supreme Court proceedings. How are the justices thinking about it? Justice on Tuesday.

standing case

The first question the court will look to answer is whether the parties have standing, or a right to bring the suit in court. In a case before the justices, which comes out of federal court in Fort Worth, Texas, a federal judge essentially dismissed the question of whether the policy was legal and the Biden administration’s challenge to the plaintiffs’ standing. was ruled in favor of the challenger borrowers. Calling the policy unconstitutional.

That case was brought by two student loan borrowers, who said they objected to the debt relief plan because the Department of Education had not sought public comment on it. This, he said, deprived borrowers and other stakeholders of weighing, resulting in a policy that arbitrarily benefits some and not others.

One of the borrowers, Myra Brown, has more than $17,000 in federal student loans, but she is not eligible for debt relief because the Biden administration excluded her loan type from the plan. The other plaintiff, Alexander Taylor, has more than $35,000 in student loans and qualifies for $10,000 in loan cancellation, but he is not eligible for the maximum amount in loan cancellation under the plan — $20,000 — because he did not receive a Pell grant. , which is college funding provided to low-income students.

His suit is supported by the Job Creators Network, an organization started by Bernard Marcus, a Home Depot co-founder and supporter of former President Donald Trump.

Legal experts generally agree that the plaintiff in the second trial before the Supreme Court has a strong case to stand. In that case, six Republican-led states sued the Biden administration over its debt-relief policy, saying they would be harmed by it because it would affect their revenues in various ways. As that case has made its way through the legal system, courts and legal experts have focused on one of the states’ arguments: the Higher Education Loan Authority of Missouri, or MOHELA, a state-affiliated student loan organization. , would lose revenue if the debt cancellation policy was allowed to take effect and would financially harm Missouri, one of the plaintiffs in the lawsuit.

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a federal judge appointed by George W. Bush rejected sued in October, saying that the states did not have jurisdiction to sue. And even some legal experts who believe the Biden administration’s debt relief program is illegal overall agree that states do not have the authority to bring the case.

Notre Dame Law School professor Samuel Bray said, “The requirement for the parties to stand is one of the things that helps the court operate in judicial mode.” Bray held that for a party to sue, they must be directly injured by the policy and that the court must be able to redress the damages.

Supreme Court justices will consider two questions: whether the plaintiffs have standing to sue and whether the debt relief program is authorized under the Heroes Act.

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Bray and William Boude, a professor at the University of Chicago Law School, wrote a brief to a friend of the Court that Missouri and other states do not meet that standard. For example, states have argued that the debt-relief plan could cost MOHELA revenue it receives through servicing federal student loans and could put the organization at risk of not paying back Missouri’s debt. Is. But, as Bray and Baud briefly note, Mohela hasn’t paid that debt in years.

“If Mohela doesn’t want to sue for the injuries Mohela suffered, then Missouri shouldn’t be able to step in and sue Mohela for the injuries,” said Bray, who believes the Biden administration does not have the legal right to cancel. student loan. Mohela has said she was not involved in the states’ decision to sue over the policy. “If you allow it here, why not allow it in many other places?” “And that would be a big change,” Bray said.

In a 2006 ruling on whether states could sue the Environmental Protection Agency for not regulating it sufficiently to prevent climate change, the Supreme Court said that in its analysis of the parties’ standing, states have ” special request”, but did not explain what was meant. According to Bray, this has led to confusion in the lower courts. The meaning can vary from the idea that the states have always stood for the notion that judges should give more weight to the standing claims of the states than those of other plaintiffs. Supreme Court Chief Justice John Roberts disagreed with that decision and wrote a dissenting opinion in the case.

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“There have been a number of cases in lower courts where courts have allowed these extraordinary standing claims and pointed to the language in Massachusetts v. EPA regarding special pleading,” Bray said. “The Supreme Court has not recently had a good opportunity to revisit the position of the State.”

It’s possible that some judges may want to be “creative” in how they decide whether states have standing, said Christopher Walker, a professor at the University of Michigan School of Law. Roberts is particularly sensitive to situations where it appears the government is playing games with procedural rules, he said. He cited Roberts’ criticism of two cases of Trump administration officials searching for legal justification for taking action that was more about policy or politics.

Walker said it’s possible Roberts could look at the Biden administration’s decision to exclude borrowers with privately held federal student loans from a debt-relief plan, similarly trying to create policy that avoids judicial review. Are. That decision, which was announced the same day the states filed their suit, nullified one of the states’ claims. The states had argued that the loan cancellation plan would encourage borrowers with privately held loans to consolidate their loans into one type of loan that was eligible for the program, which would provide state-affiliated organizations with revenue from those loans. will be deprived of

“Can they massage the standing theory into his answer? Maybe,” Walker said. “It wouldn’t completely surprise me, although I still think it’s a really tough case for them.”

If the court finds that the states have standing to sue in the matter, it could mean that every controversial federal policy will be ripe for a legal challenge by the attorney general in Bray…