Department of Education vs. Myra Brown: Student Loan Forgiveness
Supreme Court Oral Arguments Examined
I will attempt to summarize oral arguments in Department of Education v. Myra Brown. Congress passed a law in 2003 allowing the Department of Education to minimize harm to recipients of student loans during a national emergency.
According to the DOJ’s own memorandum,
The Higher Education Relief Opportunities for Students Act of 2003... [HEROES Act] vests the Secretary of Education (“Secretary”) with expansive authority to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies. The Act provides that the Secretary may “waive or modify any statutory or regulatory provision applicable to” federal student loan programs if the Secretary “deems” such actions “necessary to ensure that” certain statutory objectives are achieved. 20 U.S.C. § 1098bb(a)(1)–(2). One of those objectives is to ensure that “recipients of student financial assistance . . . are not placed in a worse position financially in relation to that financial assistance because of” a national emergency. [Emphasis mine]
During the COVID19 pandemic, President Joseph Biden deferred payments and interest for student loan borrowers. No one disputes the executive’s ability to do so. The Myra Brown case relates to the executive branch’s opinion that it also has the power to modify or waive student loans wholesale for certain classes of borrowers without any input from all affected persons and entities, including financial companies expecting interest. As Justice Roberts asked, “What is the limiting principle?” Can the executive arm of the federal government absorb a financial cost to taxpayers between 300 to 500 billion dollars without any “notice and comment” period while excluding some classes of affected persons? Is there some limit to arbitrary and capricious use of executive power when the executive forgives debts for some but not others based on temporary national emergency powers?
Much of the complexity revolves around the assumption if the Court strikes down this use of executive power, then Congress or the executive branch will attempt to rely on other legal authority to effectuate the same result. In other words, this round of executive power did not reach enough loan holders, so the next round of (attempted) relief will solicit comments and input from debtors excluded from forgiveness—ultimately including them in the largess or at least considering their needs and wants. Obviously, some speculation exists regarding the executive and legislature’s future plans, and one can sense the Court not happy about potentially re-visiting the same issues.
A few questions stood out during an often convoluted session. (At one point, Justices Kagan and Kavanaugh talked over each other multiple consecutive times, with Kavanaugh finally deferring to the more senior Kagan.)
Justice Roberts questioned the need for such broad exercise of executive power: "Didn't half the borrowers say they would not have any trouble paying their loans without regard to the forgiveness program?"
Justice Alito asked, "Why was it fair to the people who didn't get arguably comparable relief?" In other words, why isn't this exercise of executive power arbitrary and capricious?
Justice Kagan tried resolving the issue of unbridled executive power by saying the HEROES Act gave certain powers over specific loans, and "the Secretary [of Education] implemented his powers under Congress's choice, which gave him authority over loan repayment. Definitely did not give him authority over [other, non-educational] loans."
Unfortunately, Justice Kagan’s approach doesn’t address the fairness issue raised by other Justices. Congress authorized, a long time ago, the ability to forgive student loans in a national emergency. When the executive branch exercises that power to include certain groups but not others without procedural due process, is it not arbitrary and capricious? Don’t all Americans deserve equal protection under the law when the executive branch exercises vast powers without any input from affected classes? As counsel points out, “instead of doing this through [usual and customary] negotiated rulemaking and notice and comment, they -- they did -- they carved up the lines and they did it all in secret.” Justice Kagan responded that the usual process, which is time-consuming, doesn’t apply in emergencies. Her analysis seems deficient because loan forgiveness attempts here are in addition to and after the executive branch already deferred payments and interest, thus protecting student borrowers.
Justice Barrett asked whether the authorizing law assumes governmental ability to grant relief [only] in an ongoing debt payment scenario. Don’t you need some debt for the executive to modify and compromise? (She was trying to say you can’t modify zero, indicating Congress never assumed total student loan forgiveness.) Justice Barrett’s question fails basic symbolic logic. The statute doesn’t say the government can only grant relief if someone has ongoing debt. The flaws in her reasoning become apparent if you consider a workaround: reduce debt to ten dollars or five hundred dollars, but not zero. So an action that can authorize debt relief up to ten dollars of debt is legal, but the same exercise of power, if it goes from ten dollars to 0 dollars, is fatally overbroad?
Thankfully, Justice Gorsuch broke through the haze by asking the day’s smartest question: "You'd agree that doesn't authorize the Secretary to place persons in a better position than they were because of the COVID crisis?" Counsel in favor of loan forgiveness appears to make a mistake in response to Gorsuch: “we think the statute tolerates some over-breadth.” Justice Gorsuch presumably based his question on the very DOJ memorandum that authorized the program. That memorandum of opinion indeed favors a broad interpretation of the words “waive” and “modify,” but the examples used require war or a natural disaster and are therefore inherently limited:
“it allows the Secretary to provide relief to any member of the military or National Guard who is ‘serving on active duty’ or ‘performing qualifying National Guard duty’ ‘during a . . . national emergency’ … any individual who ‘resides or is employed in an area that is declared a disaster area . . . in connection with a national emergency’; and any individual who ‘suffered direct economic hardship as a direct result of a war or other military operation or national emergency.’
Remember the name of the statute? “HEROES.” The plain language in the title gives first responders, the National Guard, and others who, if serving the national interest directly on behalf of the executive branch, the benefit of doubt on student loans. Justice Kagan, despite the Act’s intended recipients, keeps returning to a “standing” argument—i.e., the excluded parties asking to be made whole are speculating they, too, will receive similar protections if normal legislative procedures are followed.
Justice Kagan’s approach is structurally sound: no argument premised on speculation is valid, and the affected parties are assuming after the Court strikes down this executive exercise of power, Congress or the executive will use or pass another law granting them relief. Yet, such matters of discretion are precisely why Gorsuch and other Justices are right. The Court has many duties, one of them basic fairness. If the government makes some people better off than others while implicating everyone's interests, and does so without following normal procedures in which it ensures it is acting on behalf of everyone, then unfairness results, affecting the entire system’s credibility.
Think of it this way: the government gives synagogues the right to hold services during COVID19 because reports indicate such buildings are smaller and lesser attended, making it easier to enforce COVID19 protocols. The government does this without notice or comment. Shouldn't Christians and Muslims be able to be heard by their government if they are not also included in the granting of the aforementioned affirmative right? The unfairness seems obvious when discussing fundamental rights or religious differences, but for some reason, it becomes harder to see when discussing money. I predict Justice Gorsuch will write the majority opinion, which will limit the executive’s power.
© Matthew Mehdi Rafat (March 1, 2023)
Disclosures: nothing herein is legal advice. No statements herein should be relied upon in any way because predictions are inherently speculative. If you are seeking legal advice, you should contact a licensed attorney in your jurisdiction as soon as possible.
Update on June 30, 2023: Justice Roberts, not Gorsuch, wrote the opinion, which limited the executive’s power. The first page of the opinion cites the language I referenced in the second paragraph above.