New Documents Undermine Supreme Court Student Debt Case

Newly unearthed documents show a major student loan servicer is projecting revenue increases even under President Joe Biden’s debt cancellation plan — directly undermining the argument Republican officials are making in their lawsuit to block the measure. But conservative justices on the Supreme Court appear prepared to strike down the debt relief program anyways, disregarding the evidence and their own legal theories to fulfill the wishes of the dark money network that helped build their Supreme Court supermajority.

At issue is the concept of “standing” — a legal term for who is allowed to bring a case to the judiciary. For years, the Supreme Court’s conservative majority has consistently shut down cases they don’t like by insisting that plaintiffs are unharmed and therefore do not have standing to be in court. However, in Republicans’ current case attempting to block student debt relief, the same conservative justices are ignoring financial records refuting any claims of harm from the proposal.

Internal records from the Missouri student loan servicer that Republican states are arguing would be harmed by Biden’s plan show the entity has actually seen a massive revenue increase in recent years that is projected to continue even if debt relief goes into effect.

“There has been no fact-finding, no discovery, [and] the case was rushed forward using a rare procedure,” said Astra Taylor, a co-founder of the Debt Collective, a debtors’ union which unearthed the new documents. “We are a very small group, we are half volunteers, and we are doing the court’s homework, we are doing the government’s work in finding these facts. And they are not ambiguous.”

A key legacy of Chief Justice John Roberts’ tenure on the court has been limiting access to the court through a narrow definition of standing.

But conservative justices — installed on the court with the help of conservative advocacy groups now bankrolling efforts to challenge student debt relief — are apparently more willing to do the bidding of right-wing donors than defend their purported judicial principles.

The new records further undermine already dubious claims to standing in the challenge to the Biden administration’s student debt plan.

Proving Standing

The case in question deals with President Joe Biden’s plan to cancel up to $10,000 in student debt for most federal borrowers (and up to $20,000 for Pell Grant recipients). The way Biden crafted the program made it vulnerable to legal challenges: Rather than canceling the debt automatically, which would make it practically impossible for courts to reverse, his plan required people to submit applications for relief.

That arrangement gave the plan’s conservative opponents time to organize against it. While they didn’t lack resources to fund the fight, they were stumped by how to prove standing.

Conservatives made numerous attempts to come up with plaintiffs who had apparently been harmed by Biden’s modest debt cancellation plan.

Only two cases made it to the Supreme Court. In one of those cases, the plaintiff argued she was being harmed by the plan because her debt wasn’t being forgiven, as she had private student loans. (That plaintiff had accepted a Paycheck Protection Program business loan — debt designed to be forgiven by the government — the previous year.)

The other is the case brought by six Republican attorneys general, Biden v. Nebraska. It made its way to the Supreme Court through an expedited process, which bypassed the typical fact-finding that happens in lower courts.

A George W. Bush-appointed federal district judge in Missouri dismissed the case, arguing the states didn’t have standing to sue. The states appealed to the Eighth Circuit Court of Appeals, which granted an injunction, halting Biden’s cancellation plan amid legal challenges.

The Biden administration appealed that ruling to the Supreme Court, which granted a “certiorari before judgment,” a rare petition that asks the high court to hear cases before legal and factual issues have been resolved by lower courts.

Biden v. Nebraska rests on an argument that the Missouri government would suffer lost revenue if the state’s quasi-governmental student loan servicer, the Missouri Higher Education Loan Authority (MOHELA), couldn’t collect the debt canceled by Biden.

During oral arguments in February, Nebraska Solicitor General James Campbell claimed that Biden’s student debt forgiveness plan “threatens to cut MOHELA’s operating revenue by 40 percent.”

Justice Elena Kagan asked Campbell why MOHELA itself hadn’t sued if that was the case. “Here the state has derived very substantial benefits from setting up MOHELA as an independent body with financial distance from the state and sue and be-sued authority,” Kagan said. “So why isn’t MOHELA responsible for deciding whether to bring this suit?”

Campbell said MOHELA could have sued, but the state also had an interest given the projected revenue losses.

However, no justice bothered to check whether the claim that MOHELA would lose revenue was true. An advocacy organization known as the Debt Collective, which has been pushing for Biden to cancel all student debt, decided to check for themselves.

“Nobody Is Actually Harmed”

The group obtained internal financial documents from MOHELA, via public records requests, showing that the entity has actually been experiencing massive revenue growth in recent years, and that growth is projected to continue under Biden’s cancellation plan.

According to an analysis co-authored by the Debt Collective and the Roosevelt Institute, a left-leaning think tank, MOHELA will see a revenue increase even if Biden’s cancellation goes into effect.

“Assuming President Biden’s proposed cancellation goes through, we estimate that MOHELA will service more than twice the number of accounts it serviced at the beginning of the COVID payment pause,” the report said. “It will also earn nearly twice as much revenue servicing federal direct loans as it has in any year prior to cancellation. This finding is backed by MOHELA’s own internal impact analysis, which shows it would make more revenue the first year after cancellation is processed than it did in 2022 or any prior year.”

The internal documents reveal that MOHELA recently acquired a new loan servicing contract, and so has actually seen a massive increase in its accounts since the loan repayment pause took effect in 2020. Even if Biden’s plan goes into effect, and an estimated two million of MOHELA’s accounts had their debt fully canceled, the company would still be servicing more accounts than before the pandemic.

Biden’s plan would end the current pause on student debt payments — meaning the rate that MOHELA gets paid to service federal loans will increase from $2 to nearly $3 per account if the plan goes into effect.

“In their brief to the Supreme Court, the six GOP attorneys general cited MOHELA’s 2022 financial statement, showing it made $88.9 million in revenue from servicing 5.2 million federal direct loans, and then went on to argue that cancellation will harm MOHELA’s revenues,” the report says. “This is 88 percent more than the amount MOHELA made in 2022, and significantly more than it has made in its entire history.”

The report supports an argument that proponents of debt cancellation have been making for years: Nobody loses.

“It’s really hard to stop student debt cancellation because you need to find someone who is harmed by it,” said Thomas Gokey, a co-founder of the Debt Collective who authored the report. “And the truth is, nobody is actually harmed by student debt cancellation. It benefits everybody. It benefits people who don’t have student debt.”

Dark Money Ties

The conservative officials attempting to block the Biden student debt relief plan have deep ties to the dark money network that helped construct the Supreme Court’s current 6-3 conservative supermajority.

The student debt case in question was first brought by Republican attorneys general in Missouri, Nebraska, Arkansas, Iowa, Kansas, and South Carolina. Those officials have been backed by Republican attorneys general in 17 more states.

“It’s patently unfair to saddle hard-working Americans with the loan debt of those who chose to go to college,” Arkansas Attorney General Leslie Rutledge, who led the lawsuit, said in a statement.

She added: “The Department of Education is required, under the law, to collect the balance due on loans. And President Biden does not have the authority to override that.”

The longtime top donor to the Republican Attorneys General Association, which elects GOP attorneys general, is the Concord Fund, a dark money network led by conservative activist Leonard Leo.

As Donald Trump’s judicial adviser, Leo helped select three of the Supreme Court’s six conservative justices, while the Concord Fund spent tens of millions boosting their confirmation campaigns.

Leo’s network has funded several other organizations filing briefs in the case, including the Foundation for Government Accountability and the New Civil Liberties Alliance.

In theory, the new findings should have salience before the conservative justices, because one of the primary legacies of the Roberts court — besides legalizing dark money political spending and enabling other forms of corruption — has been restricting who has the standing to bring lawsuits.

Since he was appointed Chief Justice of the court in 2005, John Roberts has argued for “judicial self-restraint” and setting limits on who has standing to come before his court.

“I don’t think the courts should have a dominant role in society and stressing society’s problems,” Roberts said in his confirmation hearing. “What the standing doctrine requires is that you actually be injured by what the government is doing, injured by Congress’s action.”

In 2007, Roberts voted to overturn two decades-long precedents on the basis that plaintiffs had missed filing deadlines by just a couple of days. That year, he split from the court’s majority in Massachusetts v. EPA, arguing in a dissent that Massachusetts did not have standing to sue because the injuries from global warming were not “particular” to the state.

In 2015, the liberal court watchdog the Constitutional Accountability Center wrote in a review of his first 10 years on the court that Roberts had dissented in every “significant case during his tenure as Chief Justice in which the court has refused to limit access to the courts, and he has always been in the majority when it has decided to limit such access.”

It’s a doctrine that the Roberts court has stood by in recent years. In 2020, the court’s conservative justices ruled that pensioners did not have standing to sue a bank that stole from their pension fund, because their pensions had not yet lost money. (That ruling just so happened to pave the way for billionaire GOP donor and Trump advisor Steve Schwarzman to shut down another case accusing financial firms of misleading pension funds.)

But when it comes to student debt relief, the court’s conservative justices appear willing to accept dubious standing claims to force more debt onto millions of Americans.

Two leading conservative legal theorists Samuel Bray and William Baude pointed out this stunning hypocrisy in an amicus brief that cast doubt on Missouri’s standing.

“Missouri has no standing to complain about the loan servicing fees that the Missouri Higher Education Loan Authority (MOHELA) might lose,” they wrote, also noting that the number of accounts MOHELA was servicing had nearly doubled the previous year. “MOHELA is far and away the most interested plaintiff, with Missouri’s claims being merely derivative of MOHELA’s. MOHELA has chosen not to bring a lawsuit, and as the ‘proper party’ to the suit, its decision ought to carry the day.”

Baude and Bray wrote that “even if the executive branch has exceeded its authority,” as conservatives argue, it “does not permit the judicial branch to exceed its authority.”