Supreme Court to hear case on legality of Biden’s loan forgiveness plan

As a co-blogger jonathan adler note, the Supreme Court has decided to hear one of the cases challenging the legality of President Biden’s massive $400 billion loan cancellation plan. The judges will consider both whether the six GOP-led state governments taking the case have standing and whether the program is legal.

The Supreme Court also chose not to lift the lower court’s injunction blocking implementation of the plan in the meantime. So the plan will remain stalled at least until the Supreme Court hears oral arguments on the case in February, and likely until the court issues a ruling (which will likely happen in June). The Biden administration had asked that the injunction be lifted immediately.

Technically, the court didn’t actually deny the administration’s request to vacate the injunction, but merely indicated that its consideration was “deferred pending oral argument.” But the effect is essentially the same. As a practical matter, I think if a majority of judges expected to rule in favor of the plan, they likely would have lifted the temporary injunction as well. This is not definitive proof that the court will ultimately rule against the loan forgiveness plan. But it’s still a bad sign for the position of the administration. Or so, at least, it seems to me. But I admit that it is possible that there is an angle that I am missing here. We will know more after the pleading!

In previous posts I evaluated the decision of the Eighth Circuit Court that the judges will consider in this case, criticized the district court’s decision which the Eight Circuit reversed (the district judge had ruled that the States lacked standing), and faults underlined in the administration’s legal justification for the plan, which builds on the HEROES Act of 2003. The administration’s approach has a lot in commonn with Trump’s effort to use emergency powers to divert military funds to build his border wall (which, for those counting, I strongly opposed at the time). me too highlighted the dangers of the ultra-narrow standing theory on which the administration relies to try to prevent the courts from ruling on the merits. Like Jonathan Adler, I think the administration is unlikely to prevail on the merits if the Supreme Court does (and therefore concludes that the states have standing).

I know I promised to do an article giving a general overview of the loan forgiveness dispute. Due to a combination of illness and the press of other business, it took longer than expected. But I hope to have it soon! In the meantime, however, the significance of other cases challenging the plan have been significantly reduced by the Supreme Court’s decision to hear this one.

If the Court decides on the merits, it will effectively render the other cases moot. If they refuse to do so because they conclude that the plaintiffs do not have standing, it is unlikely that anyone else can ever have standing to challenge the plan, because the plaintiffs here have a stronger justification for standing than all the others so far.

UPDATE: The one exception to my very last point is that the newly Republican-controlled House of Representatives could potentially have standing to sue even if state plaintiffs cannot. See my discussion of the relevant precedent (which stemmed from the then Democratic-controlled House’s challenge to Trump’s embezzlement of border wall funding) here.