Standing in the Trenches: Republicans’ Uphill Legal Battle Against Student Loan Cancellation

by Hailey Martin, Associate Member, University of Cincinnati Law Review Vol. 91

I. Introduction

Although President Joseph Biden has recently announced a wide sweeping action forgiving thousands of student loans, not everyone is pleased about it. Republicans hope to challenge this action in court, claiming it is unconstitutional and an abuse of the Executive’s power. To succeed, Republicans need to find someone with proper standing, that is the ability to bring a suit. Section II will provide background on standing jurisprudence generally. Section III will discuss who, if anyone, is likely to have standing to challenge this Executive action, and will argue that loan providers and states have the best chance of overcoming the jurisprudential hurdles to challenging the action on the merits. Additionally, this Section will discuss other policy considerations that could have a secondary effect on whether a federal court would find a party to have sufficient standing. Section IV will conclude by arguing that it is unlikely any person has standing to sue against President Biden’s action at this stage. However, given the fractious nature of standing jurisprudence and public pressure, the Court may be inclined to bend the framework.

II. Background

President Biden announced in late August of 2022 that the Education Department would cancel up to $10,000 of federal student loan debt for individuals making less than $125,000 a year and married couples who make less than $250,000 a year.¹ With President Biden’s recent executive action forgiving student loans, many politicians are working on a legal strategy to overturn the plan, which could stop millions of Americans from receiving up to $20,000 in loan forgiveness.² Republicans argue that the President exceeded his power under the Higher Education Relief Opportunities for Students Act of 2003 (“HEROES Act”) by ordering this Action.³ The HEROES Act was passed after the September 11th terrorist attacks and permits the executive branch to forgive student loans during national emergencies.⁴ Opponents are likely to argue that the Act does not give the President as broad of power as he is trying to assert, especially given the fact that the national emergency of the COVID-19 pandemic is diminishing.

However, the first (and bigger) issue lies in who, if anyone, has standing to sue. For a plaintiff to bring a suit in federal court, they must have either Article III standing or prudential standing conferred upon by Congress.⁵ Use of the term “standing” may be traced to Warren Court jurisprudence in the mid-twentieth century.⁶ It is important to the analysis of standing to understand how it is has developed over time. The Supreme Court in its leading decision of Allen v. Wright acknowledges that the “absence of precise definitions [of standing in the Constitution]” leaves its application broader.⁷ However, the courts have for many years, relied on a plaintiff showing a concrete and particularized injury as a prerequisite for Article III standing.⁸ Stated differently, plaintiffs must show a cognizable injury that is (1) fairly traceable to the challenged action and (2) redressable by a favorable court decision.⁹

III. Discussion

A. Potential Litigants

Finding litigants that have standing is the first issue potential challengers to the executive action would face. Loan providers and states likely have the best opportunity for success while taxpayers and former borrowers should feel pessimistic about their chances.

When challenging the constitutionality of federal statutes, the Court has been inconsistent on the question of whether taxpayers have standing to sue. In early cases such as Frothingham v. Mellon, the Court first held that the plaintiff, as a federal taxpayer, lacked standing to sue.¹⁰ However, forty-five years later in Flast v. Cohen, the Court upheld taxpayer standing on the question of “whether there was a logical nexus between the status asserted and the claim sought to be adjudicated.”¹¹ However, following Flast, the Court has been wary of granting standing based on taxpayer status alone.

In Hein v. Freedom from Religion Foundation, for example, the Court interpreted Flast very narrowly, holding that, since the action challenged by plaintiffs was an executive action as opposed to an act of Congress, Flast was distinguishable and the plaintiffs in Hein lacked Article III standing.¹² Justice Souter dissented opining that when “executive agencies spend identifiable sums of tax money . . . taxpayers suffer injuries.” This idea that taxpayers suffer concrete injuries could be plausible. Nonetheless, the practicality of any taxpayer being able to sue for any use of money by the government that they dislike is not plausible and contrary to the policy behind the doctrine. Since the Court has been reluctant to apply the Flast principles more broadly, it is unlikely that a taxpayer would succeed in a dispute over Article III standing in this matter.

Conveying Article III standing to former borrowers would also be unlikely to satisfy standing. In a recent article, Jack V. Hoover argued compellingly that if a court considered former borrowers to have standing, then plaintiffs could challenge any action or policy that confers a benefit on someone else.¹³ Not only would this position on standing undermine the policy behind the doctrine, but it may also be preempted by Lujan v. Defenders of Wildlife where the Court held that it is unlikely for a plaintiff to obtain standing due to the “regulation of someone else.”¹⁴ Thus, a federal court would likely find that just because groups of people will have the benefit of having their loans forgiven does not mean a harm is being levied onto former borrowers. However, the recent case of Garrison v. U.S. Department of Education, may change how we look at former borrower standing.¹⁵ Plaintiff Frank Garrison had paid his student loans for the past six years as part of a Public Service Loan Forgiveness program (“PSLF”) which allows him full loan forgiveness after ten years of payments.¹⁶ Garrison’s enrollment in PSLF meant the Education Department’s new loan cancellation program would automatically apply to his loans.¹⁷ Garrison resides in Indiana, which is going to tax the upcoming cancellation as income, but the state does not tax Garrison’s PSLF loan forgiveness. Therefore, Garrison would allegedly be worse off by having his loans forgiven under this program than under his PSLF repayment program.¹⁸ Garrison could obtain standing if a court finds that he suffered a concrete harm from the tax liability.¹⁹ But, the district court denied Garrison’s motion finding that because the Department of Education amended the debt relief plan to allow borrowers to opt-out of the automatic loan forgiveness, which exempted Garrison from receiving the debt relief, Garrison cannot be irreparably harmed.²⁰ Garrison moved for leave to amend his complaint and he had until October 10, 2022 to file an amended complaint.

Loan providers may have the best chance to bring suit because their injury seems to be the most concrete. Loan providers receive money for each loan they service. Therefore, eliminating an excess of loans would eliminate the money loan servicers receive as well. However, loan servicers would still need to show a concrete injury. Reduced loans and therefore reduced funds could provide just that.²¹

States may have the next best opportunity for success. States can sue as “parens patriae.” This means that states are not suing other states or private parties but the federal government or its officials for allegedly unconstitutional acts.²² As with other standing jurisprudence, parens patriae standing lineage is fractured. States likely have a better chance than private litigants, given the Court’s suggestion that a state’s standing is broader than that of a private citizen.²³ Some believe standing is relaxed for states because it creates a check on the federal executive.²⁴ This proposition would further support standing to help serve as a check on the federal government. However, other scholars believe that standing should not be more relaxed for states as they have more power through agencies that can enact changes in legislation. Regardless of whether states have a relaxed standard to meet, they still must allege a particularized injury. Here, states could argue the debt cancellation harms their sovereign interest, which implicates their own powers, or alternatively, their quasi-sovereign interests, which implicate their citizens’ rights. Several states did exactly that in Nebraska v. Biden, but were denied standing.²⁵ The Eastern District Court of Missouri dismissed the case concluding that the State of Missouri lacked standing to sue on behalf of MOHELA, a loan provider.²⁶ The court found Missouri failed to connect the alleged injuries of MOHELA to injuries to the State of Missouri. Additionally, the court found that the Missouri legislature, through their enactment of Missouri Revised Statute Sections 173.425²⁷ and 173.410,²⁸ made clear that the legislature intended to “create a self-sustaining and financially independent agency . . . and the lack of any obligation for Missouri to pay MOHELA’s debts strongly militates against finding MOHELA to be an ‘arm of the State.’”²⁹ Even if this is true, the court left open the door for MOHELA to sue on their own behalf, not acknowledging whether MOHELA suffered an actual injury.

B. Political Makeup of the Court

Given the fractured standing jurisprudence³⁰ and wide latitude of the Supreme Court to accept a case on the merits, the conservative majority may not apply the standing doctrine to this case or may analyze the standing issue with leniency in order to address this issue on the merits. It is difficult to argue that the Justices solely decide when a litigant has standing based on their individual political makeup. However, trends show that over the years, the Court uses standing doctrine to insulate administrative agencies from judicial review, to insulate progressive legislation from judicial attack, and to block out political interest groups.³¹ But, there exists plenty of standing cases that have no political valence or were unanimously decided.³² Thus, predicting whether a challenger to student loan cancellation will be successful on the standing inquiry is obfuscated by the Court’s inconsistent trends in this realm.

C. Standing Dead Zone

One of the last issues standing doctrine brings up is the harsh reality that maybe no one will be able to bring suit. In Justice Lewis Powell’s concurring opinion in U.S. v. Richardson he opined that “the absence of any particular individual or class to litigate these claims gives support to the argument that the subject matter is committed to the surveillance of Congress, and ultimately to the political process.”³³ However, this seems unrealistic and far-fetched. Obviously, there are many issues that should be left to the political process. However, the Framers created three branches of government to check each other. Does the fact that a grievance is widely shared ensure that the political branches will respond to it? This author agrees with Justice Powell that the Court’s role is not to generally supervise the actions of the government. However, the Court’s duty is to protect the rights of individuals against unlawful governmental action.

IV. Conclusion

The question of whether President Biden’s student loan forgiveness action is constitutional continues and may linger without judicial intervention. Although standing to sue presents an uphill battle for potential litigants, it is not an insurmountable barrier. Taxpayers likely do not have standing since taxpayers have been found to not suffer injuries when money is not spent the way they wish. Former borrowers likely do not suffer an injury just because other groups are conferring a benefit. Loan providers suffer the most concrete injury in that money they would have been receiving for student loans, is essentially wiped away. Additionally, because states can assert sovereign or quasi-sovereign interests as harms, their standing could be broader than that of a private litigant. Given the conservative majority of the Supreme Court, the Court may be more willing to find standing in a case attacking non-democratic action. However, the hoops to jump through to potentially have this case heard on the merits may not be worth the potential outcome.

Cover Photo by Marco Verch Professional Photographer on Flickr and licensed under CC BY 2.0.

Hailey Martin

Hailey Martin grew up in Columbus, Ohio and is a Double Bearcat at UC, majoring in psychology for undergrad. Outside of Law Review, Hailey serves on SBA as the Social Media Chair, on Family and Juvenile Law Club Exec, and is an SSG Leader. Outside of law school, Hailey enjoying cycling and working at Cyclebar, running, and staying active.

References

1
Katie Lobosco, Republicans Consider Suing Biden Over Student Loan Forgiveness, CNN (Sept. 1, 2022, 8:21 PM), https://www.cnn.com/2022/09/01/politics/republicans-sue-biden-student-loan-debt/index.html.
2
Id.
3
The HEROES Act “provides the Secretary broad authority to grant relief from student loan requirements during specific periods.” Id.
4
See Higher Education Relief Opportunities for Students Act of 2003, Pub. L. No. 108-76, 117 Stat. 904 (2003) (codified at 20. U.S.C. §§ 1098aa-1098ee).
5
Allen v. Wright, 468 U.S. 737, 751 (1984) (“Standing doctrine embraces several judicially self-imposed limits on the exercise of federal jurisdiction, such as the general prohibition on a litigant’s raising another person’s legal rights, the rule barring adjudication of generalized grievances, and the requirement that a plaintiff’s complaint fall within the zone of interests protected by the law invoked.”).
6
Joseph Vining, Legal Identity: The Coming of Age of Public Law, 55 (1978).
7
However, the Court has relied on three factors, (1) injury in fact that is actual, concrete, and particularized, (2) a causal connection between the injury and the conduct, and (3) a likelihood that the injury can be redressed, to confer standing. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992).
8
Allen v. Wright, 468 U.S. 737 (1984).
9
Id. at 738.
10
Frothingham v. Mellon, 262 U.S. 447 (1923).
11
Flast v. Cohen, 392 U.S. 83, 105 (1968) (holding the plaintiff taxpayer established a nexus between their status as a taxpayer and the precise nature of the constitutional infringement alleged).
12
Hein v. Freedom from Religion Found., Inc., 551 U.S. 587, 614 (2007).
13
Jack V. Hoover, Standing and Student Loan Cancellation, 108 Va. L. Rev. Online 129 (2022).
14
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992).
15
Complaint ¶ 1, Garrison v. U.S. Dep’t of Educ., No. 1:22-cv-1895 (S.D. Ind. Sept. 27, 2022).
16
Id. ¶ 2.
17
Id. Most borrowers will have to apply for debt relief. If the U.S. Department of Education does not have one’s income data, they must fill out an application that will be available in early October. However, the Department of Education has income data for around eight million borrowers, including Garrison, and these borrowers will get relief automatically. See One-Time Student Loan Debt Relief, Fed. Student Aid, https://studentaid.gov/debt-relief-announcement/one-time-cancellation (last visited Sept. 28, 2022).
18
Garrison will likely incur state income tax liability of more than $1,000 for 2022 as a result of the student loan cancellation. See Complaint ¶ 67, Garrison v. U.S. Dep’t of Educ., No. 1:22-cv-1895 (S.D. Ind. Sept. 27, 2022).
19
But see Annie Nova, What the First Legal Challenge to Derail Biden’s Student Loan Forgiveness Plan Means for Borrowers, CNBC (Sept. 28, 2022, 11:30 AM), https://www.cnbc.com/2022/09/28/what-legal-challenge-to-student-loan-forgiveness-means-for-borrowers-.html (stating the claim is baseless because no one will be forced to debt relief and opting out of the relief, but acknowledging that some courts might be flexible in their interpretation of standing if they want to take the case).
20
Garrison v. U.S. Dep’t of Educ., No. 1:22-cv-1895 (S.D. Ind. Sept. 27, 2022).
21
Contra Jack V. Hoover, Standing and Student Loan Cancellation, 108 Va. L. Rev. Online 129 (2022). Hoover writes that there is no legally protected interest in retaining any specific number of loans and the remedy would be monetary as opposed to injunctive relief. Id. However, Hoover even states that the Court does not provide clear guidelines on what constitutes a legally protected interest. Id. Despite Hoover’s conclusion, the financial injury is likely enough to suffice as a concrete injury to obtain standing.
22
Massachusetts v. Mellon, 262 U.S. 447 (1923) (holding that the State under some circumstances, may sue as paren patriae for the protection of its citizens).
23
Massachusetts v. EPA, 594 U.S. 497 (2007) (recognizing a state’s standing to sue to require the federal government to comply with a federal statute).
24
Calvin R. Masey, Of Sovereignty, States, and Standing, 61 Fla. L. Rev. 249 (2009).
25
State of Nebraska v. Biden, No. 4:22CV1040, 2022 WL 11728905 (E.D. Mo. Oct. 20, 2022).
26
Id.
27
Mo. Rev. Stat. § 173.425 (2022) (“No asset of the authority shall be considered to be part of the revenue of the state within the meaning of Article III, Section 36, of the Constitution of Missouri, and no asset of the authority shall be required to be deposited into the state treasury, and no asset of the authority shall be subject to appropriation by the general assembly . . . .”).
28
Mo. Rev. Stat. § 173.410 (2022) (“The state shall not be liable in any event for the payment of the principal of or interest on any bonds of the authority or for the performance of any pledge, mortgage, obligation, or agreement of any kind whatsoever which may be undertaken by the authority.”).
29
State of Nebraska v. Biden, 2022 WL 11728905, at *13-14.
30
See Justice Scalia’s concurring opinion in Hein v. Freedom from Religion Found., Inc., 551 U.S. 587, 614 (2007), for an argument that “the precedent’s lack of a logical theoretical underpinning has rendered our taxpayer standing doctrine such a jurisprudential disaster that it ought to be overruled.”
31
See Daniel E. Ho & Erica L. Ross, Did Liberal Justices Invent the Standing Doctrine?, 62 Stan. L. Rev. 591 (2010).
32
Id.
33
United States v. Richardson, 18 U.S. 166, 170 (1974) (Powell, J., concurring).