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19 July 20233 minute read

US Supreme Court strikes down federal student loan forgiveness program

In a decision issued on the last day of the Supreme Court’s 2022-2023 term, a 6-3 majority held that the Biden Administration’s decision to forgive $10,000 (and in some instances $20,000) in federal student loans for most borrowers exceeded the statutory authority granted by Congress to the Executive.  Biden v. Nebraska, No. 22-506, 600 U.S. __ (2023).

Construing a statute authorizing the Secretary of Education to “waive or modify any statutory or regulatory provision” as applicable to student financial assistance programs, the majority opinion found that language insufficient to authorize the Secretary to cancel $430 billion of student loans.  As an alternative holding, the majority held that the loan forgiveness program failed to meet the clear congressional statement requirement of the “major questions doctrine” adopted by the Court last year in West Virginia v. EPA. 

The decision is further evidence that the Court majority has embraced the major questions doctrine, if not its precise contours, and may apply it to a range of federal agency actions.    

The majority opinion, penned by Chief Justice John Roberts, is noteworthy in a few respects. 

First, the Court applied a liberal view of standing, holding that a state that otherwise lacked standing could establish standing indirectly through an independent public corporation whose profits may be used to fund college development projects and student aid in that state, even though the corporation had declined to bring such a suit itself. 

Second, the majority’s statutory construction, along with Justice Barrett’s concurrence, appears to be founded in the view that Congress could not have intended the broad grant of power suggested by the plain wording of the statute.

Finally, the Court invoked the major questions doctrine as an alternative ground for invalidating the loan forgiveness program, relying primarily on the “economic and political significance” of the Executive action. The Court’s limited discussion did not clarify criteria for determining when the new doctrine should apply or provide other guidance for lower courts applying the doctrine. The Court also was silent regarding the interplay of the major questions doctrine and the longstanding two-step Chevron analysis of executive agency construction and application of statutes. 

Going forward

The question of how federal courts will treat agency implementation of general congressional directives and delegations of power going forward may come into sharper focus next term. In Loper Bright Enterprises v. Raimondo, the Court is expected to address whether it should overrule its decision in Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). Such a ruling could have profound implications for federal regulations and regulated businesses.

Learn more about the implications of this decision by contacting the author or your DLA Piper relationship partner.