Last Friday I wrote about the new lawsuit filed by eleven red states challenging President Biden’s massive new student loan forgiveness program. As I noted in that post, this case is similar in many ways Biden v. Nebraskathe 2023 case in which the Supreme Court invalidated the administration’s previous giant loan forgiveness plan.
One such parallel is that the administration will likely seek to prevail by arguing that the complaining states do not have “standing” to bring the case because they have not suffered significant harm. In Biden v. Nebraskathe Supreme Court (and lower courts) found that the plaintiffs had standing because the state of Missouri (one of the six state plaintiffs in that case has a state agency – the Missouri Higher Education Lending Authority) State of Missouri (MOHELA) – that federally supported student loan services and those of MOHELA would be reduced if some of these loans were forgiven.
As discussed in my last post, Louisiana, one of the plaintiffs in the new case, has a state student loan agency that appears to be similar to MOHELA. But it may not be exactly the same thing. Among other things, it is unclear whether it continues to provide federally backed student loans, in addition to servicing its own loans. Therefore, it may be possible for courts to distinguish the Louisiana agency from MOHELA. The appellant States have other theories on which they could take a position. But these are not clear winners under current Supreme Court precedent.
But the plaintiffs’ standing problems could almost easily be resolved if the state of Missouri were to join the case! So they could use exactly the same reasoning that prevailed in Biden v. Nebraska. If even some of the loans that would be forgiven (or partially forgiven) under the new plan were serviced by MOHELA, that agency would risk losing revenue if the plan were implemented, which in turn would be a detriment to the state!
The Biden administration and other supporters of its previous loan forgiveness plan have raised a number of arguments against MOHELA’s theory of permanence (e.g., they argued that MOHELA’s administrative separation from other state agencies meant that the state could not make claims based on damages suffered by MOHELA). But all these were rejected by the Supreme Court Biden v. Nebraska. And it is highly unlikely that the Supreme Court will overturn or significantly limit that precedent now.
I was actually a little surprised that Missouri isn’t already included in the lawsuit challenging the new loan forgiveness plan. Nearly all of the legal, moral, and political objections to the original plan also apply to the new one (I’ve summarized them here and here). Both plans would exacerbate our already severe fiscal crisis, both are regressive, both manipulate vague statutes for the purpose of raiding the Treasury, both create perverse incentives for universities (we can raise tuition, expecting Uncle Sam to take on a lot of the burden). part of the bill!), and both are unfair to taxpayers, including college graduates and people who paid off student loan debt without a federal bailout. If Missouri leaders opposed the previous loan forgiveness plan for these reasons, I suspect they will oppose this one too.
Maybe Missouri simply doesn’t want to work with the odious Kansas Attorney General Kris Kobach, the man in charge of the eleven state lawsuits (Kobach has been sanctioned by the federal courts for various types of misconduct, on several occasions). If that’s their concern, I can understand it; Personally, I’m not a fan of Kobach. Or perhaps there is some other reason why they could not or did not want to conclude an agreement with the other claimant states.
If so, there is nothing stopping Missouri from simply filing a lawsuit challenging the plan! It would be in a different circuit (the Eighth) than the one in which Kansas filed its case (the Tenth). Even if the Kansas-led lawsuit ultimately fails due to lack of standing, Missouri’s could still prevail.
Of course, it is possible that the Biden administration could win the case on the merits, even if the plaintiffs were justified. But, for the reasons summarized in my last post, the substantive case against the plan is strong, supported by Biden v. Nebraska. At the very least, permanently eliminating the permanent issue would be a major step forward for those who challenge the new plan.
I wish this step wasn’t necessary. People trying to thwart illegal government spending should not be forced to resort to the kind of roundabout tactics that prevailed during that time Biden v. Nebraska. In my view, every taxpayer should have the right to challenge illegal government spending. Taxpayers are the final – and usually the most important – victims of such abuses of power. For those keeping score, I held the same view even when blue states and others objected to Donald Trump’s attempt to divert military funds to build his border wall, which I also opposed. But it is highly unlikely that the Supreme Court will adopt taxpayer standing any time soon.
At the same time, it is also unlikely that the hold-in position can be reversed Biden v. Nebraska. This creates a great opportunity for Show Me State to showcase them again! I hope they will be up to the challenge.
UPDATE: It turns out that Missouri has already launched its own separate lawsuit challenging the new plan, filed on March 29, one day after the Kansas-led lawsuit. I have been very busy the last couple of days and somehow missed this development. I apologize to the readers for this oversight.