Student Loan Cancellation Under the HEROES Act

Student Loan Cancellation Under the HEROES Act

Student Loan Cancellation Under the HEROES
April 14, 2023
Act
Edward C. Liu
On August 24, 2022, Secretary of Education Miguel Cardona announced that he would invoke
Legislative Attorney
the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) to cancel up

to $20,000 of federal student loan debts for borrowers who fell below certain income thresholds.
Sean M. Stiff
The HEROES Act authorizes the Secretary to “waive or modify” statutory or regulatory
Legislative Attorney
provisions applicable to federal student financial assistance programs under Title IV of the

Higher Education Act (HEA) of 1965 to ensure that borrowers are not placed in a worse position
financially in relation to their student loans as a result of a war, other military operation, or

national emergency.
During the course of the COVID-19 pandemic, which Presidents Trump and Biden both declared a national emergency, the
Secretary of Education (Secretary) has used the HEROES Act to provide a number of flexibilities to both borrowers and
schools that participate in HEA student loan programs. These flexibilities include a pause on federal student loan repayment,
interest accrual, and involuntary collections during the entirety of the pandemic. Secretary Cardona has said that the
cancellation policy is intended to address heightened risks of delinquency or default caused by the end of two years of loan
repayment forbearance. However, the HEROES Act has not been used previously to cancel existing student loan balances.
Estimates of the policy’s cost vary, but for its part, the Department of Education (ED) predicts a cost of $379 billion.
Plaintiffs filed multiple lawsuits challenging the cancellation policy before any borrowers could obtain relief under it. Certain
suits resulted in two federal court orders blocking implementation of the program. The Supreme Court agreed to review these
two cases, Biden v. Nebraska and Department of Education v. Brown, and heard oral argument on February 28, 2023. The
questions for which the Court granted certiorari generally can be divided into jurisdictional questions, that is, whether federal
courts may hear the challenges to the cancellation policy, and merits questions, that is, assuming jurisdiction exists, whether
the cancellation policy is lawful.
With respect to the jurisdictional questions, the Court is considering whether the plaintiffs in the two cases have
demonstrated that they have standing to sue to challenge the policy—that is, whether the plaintiffs have suffered an injury-in-
fact that is fairly traceable to the policy and likely to be redressed by the remedies that the plaintiffs seek. In Biden v.
Nebraska, the plaintiffs are several states. The Nebraska plaintiffs argue that the cancellation policy would result in financial
harm and reduced state income tax revenues. The plaintiffs in Department of Education v. Brown are individual student loan
borrowers. The Brown plaintiffs argue that they have been injured by the Secretary’s adoption of the policy without public
participation in its design, resulting in policy eligibility criteria that limit debt relief for these borrowers.
With respect to the cancellation policy’s lawfulness, the parties focus on how broadly or narrowly to read the HEROES Act’s
waiver and modification authority, as well as whether the cancellation policy is sufficiently related to addressing the effects
of the pandemic on student loan borrowers. The plaintiffs argue that the policy should be evaluated under the Court’s “major-
questions doctrine,” which counsels against reading ambiguous statutory text to delegate administrative authority to make
radical or fundamental changes to a statutory scheme in the absence of clear congressional authorization. Beyond these
statutory authority questions, the Court may also consider whether the Secretary reasonably explained his decision to adopt
the policy and comported with procedures for exercising such authority.
The Court’s decisions in these cases could have a variety of implications for the federal student loan programs that ED
administers. The Court’s rulings will likely resolve whether up to 40 million borrowers will receive loan balance discharges
under the policy. The rulings may also clarify ED’s authority to invoke the HEROES Act in the future to waive or modify
provisions of law applicable to federal student financial assistance programs. Finally, the rulings may further develop
important aspects of Supreme Court doctrine with applications beyond federal student loan programs, including the Article
III standing of states as plaintiffs and the Court’s major-questions doctrine.
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Contents
Background ..................................................................................................................................... 2
Federal Student Loan Programs ................................................................................................ 2
The Federal Family Education Loan Program .................................................................... 3
The Federal Direct Loan Program ...................................................................................... 5
Legislative History and Prior Exercises of the HEROES Act ................................................... 6
Recent Public Debate over Student Loan Cancellation............................................................. 8
Cancellation Policy Design ..................................................................................................... 10
August 2022 Cancellation Eligibility ................................................................................ 10
September 2022 Consolidation Limit ................................................................................ 11
ED’s “Supporting Analysis” ................................................................................................... 12
Budgetary Impacts of HEROES Act Uses .............................................................................. 14
Supreme Court Review of Cancellation Policy: Procedural History ............................................. 16
Nebraska v. Biden .................................................................................................................... 17
Brown v. U.S. Department of Education ................................................................................. 18
Supreme Court Grants Certiorari Before Judgment ................................................................ 19
Do Plaintiffs Have Standing to Challenge the Cancellation Policy? ............................................. 20
Financial Harm ........................................................................................................................ 21
Servicer Injury .................................................................................................................. 22
Direct Harm Theory .......................................................................................................... 23
Indirect Harm Theory ....................................................................................................... 27
Consolidation Injury ......................................................................................................... 29
Procedural Injury ..................................................................................................................... 33
Tax Revenue Injury ................................................................................................................. 36
Is the Cancellation Policy Substantively Valid? ............................................................................ 38
Scope of HEROES Act Authorization ..................................................................................... 38
Waiver, Modification, and the Major-Questions Doctrine ................................................ 38
Ensuring Affected Individuals Not Placed in a Worse Position ........................................ 42
Is the Cancellation Policy Procedurally Valid? ............................................................................. 44
Arbitrary-and-Capricious Claim ............................................................................................. 44
Whether the Secretary Considered Alternatives to the Cancellation Policy ..................... 44
Reliance Interests .............................................................................................................. 45
Considering Important Aspects of a Problem and the Consolidation Limit ..................... 46
Pretext ............................................................................................................................... 46
Public-Participation Claim ...................................................................................................... 48
Potential Implications of Nebraska and Brown ............................................................................. 50
Potential Effects on the Cancellation Policy ........................................................................... 50
Potential Effects on HEREOS Act Authority .......................................................................... 51
Potential Effects on Broader Legal Doctrine .......................................................................... 52

Contacts
Author Information ........................................................................................................................ 52

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Student Loan Cancellation Under the HEROES Act

n August 24, 2022, Secretary of Education (Secretary) Miguel Cardona announced that
the pandemic-related pause on federal student loan repayment, interest accrual, and
O involuntary collections (payment pause) would end on December 31.1 The Secretary
found that for some borrowers, the transition to repayment after more than two years of
forbearance posed a heightened risk of delinquency or default.2 If a borrower fell into these
nonpayment statuses, the Secretary reasoned, they would be worse off in relation to their federal
student loans than they were before the pandemic, even accounting for the benefits of the
payment pause.3
To forestall these perceived risks, the Secretary invoked asserted authority under the Higher
Education Relief Opportunities for Students Act of 2003 (HEROES Act) to cancel the student
loan debts of certain borrowers.4 The statute authorizes the Secretary to “waive or modify any
statutory or regulatory provision applicable to the student financial assistance programs” of Title
IV of the Higher Education Act (HEA) of 1965 “as the Secretary deems necessary” in connection
with a war or national emergency to provide certain relief.5 In particular, the Act authorizes the
Secretary to waive or modify such provisions “as may be necessary to ensure that” recipients of
Title IV assistance “are not placed in a worse position financially” in relation to that assistance
because of a national emergency.6
Under the Secretary’s cancellation policy, the Department of Education (ED) would provide up to
$10,000 in cancellation benefits to borrowers with adjusted gross incomes in 2020 or 2021 falling
below stated thresholds.7 ED would apply cancellation to, among others, Federal Direct Loan
Program loans and Federal Family Education Loan Program loans held by ED or one of its
guaranty agencies that disbursed before June 30, 2022.8 If a borrower had received a Pell Grant at
any time, ED would provide up to an additional $10,000 in benefits, for a total of $20,000.9
The Secretary’s decision could have far-reaching effects if implemented. According to ED, over
40 million borrowers (about 88%) are eligible for some amount of cancellation under the policy.
Full participation in the policy by eligible borrowers would leave 20 million borrowers (about
44%) with no remaining federal student loan debt.10 ED expects, though, that not all eligible
borrowers would claim the benefit. If 81% did, ED expects that the policy would increase the
federal government’s cost of having made affected loans or loan guarantees by $379 billion.11

1 Memorandum from Miguel Cardona, Jr., Secretary of Education, to Richard Cordray, Chief Operating Officer of
Federal Student Aid 1 (Aug. 24, 2022) [hereinafter Cardona Memo] (filed as Exhibit B to Decl. of James Richard
Kvaal, Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. filed Oct. 7, 2022)).
2 See id.
3 See id.
4 See id.
5 20 U.S.C. § 1098bb(a)(1).
6 Id. § 1098bb(a)(2).
7 Federal Student Aid Programs (Federal Perkins Loan Program, Federal Family Education Loan Program, and William
D. Ford Federal Direct Loan Program), 87 Fed. Reg. 61512, 61514 (Oct. 12, 2022).
8 Id.
9 Id.
10 See Attachment 1 to Memorandum from James Richard Kvaal, Under Secretary of Education, to Miguel A. Cardona,
Secretary of Education, on the Rationale for Pandemic-Connected Loan Cancellation Program 12 (Aug. 24, 2022)
[hereinafter Supporting Analysis] (filed as Exhibit A to Decl. of James Richard Kvaal, Nebraska v. Biden, No. 4:22-cv-
01040 (E.D. Mo. filed Oct. 7, 2022)).
11 U.S. Department of Education Estimate: Biden-Harris Student Debt Relief to Cost an Average of $30 Billion
Annually Over Next Decade, U.S. DEP’T OF EDUC., https://www.ed.gov/news/press-releases/us-department-education-
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The Secretary’s decision drew debate over whether Congress had delegated authority to the
Secretary to discharge student loan balances on this scale, which ED has not previously attempted
to do under the HEROES Act or any other authority. Within weeks of the Secretary’s decision,
individuals, groups, and states filed lawsuits challenging the policy. By November 2022, plaintiffs
in two such cases obtained court orders blocking the policy’s implementation, so that to date ED
has yet to cancel any student loan debt under the policy.12
Those two cases are now before the Supreme Court for review. The cases, argued before the
Court on February 28, 2023, raise important, unsettled questions of standing and statutory
authority. In the first case, Biden v. Nebraska, six states allege impending financial harm or tax-
revenue injury on account of the policy.13 The second case, Department of Education v. Brown,
features two borrowers who claim procedural injury from not having been able to participate in
the policy’s development.14 Both suits include arguments that the cancellation policy exceeds the
Secretary’s HEROES Act authority.
The Court’s decision on these and other important questions of standing and statutory authority
will likely determine whether the Secretary can implement the cancellation policy. This report
begins by placing those important questions in their context, surveying affected federal student
loan programs,15 past uses of HEROES Act authority,16 and congressional debates concerning
student loan cancellation.17 The report then describes the cancellation policy itself18 and traces the
history of Nebraska and Brown in the lower courts.19 This report next assesses the parties’ key
legal arguments about standing,20 statutory authority for the policy,21 and whether the Secretary
adopted the policy in a procedurally valid manner.22 Finally, this report concludes with a
discussion of potential implications of decisions in Nebraska and Brown for the cancellation
policy, for the Secretary’s HEROES Act authority, and for legal doctrines that are not confined to
the federal student loan context.
Background
Federal Student Loan Programs
For decades, the federal government has helped students and their parents finance higher
education under several federal student loan programs, authorized under the HEA23 and other

estimate-biden-harris-student-debt-relief-cost-average-30-billion-annually-over-next-decade (last visited Apr. 14, 2023)
[hereinafter ED Cost Estimate].
12 See infra “Supreme Court Review of Cancellation Policy: Procedural History.”
13 See infra “Nebraska v. Biden.”
14 See infra “Brown v. U.S. Department of Education.”
15 See infra “Federal Student Loan Programs.”
16 See infra “Legislative History and Prior Exercises of the HEROES Act.”
17 See infra “Recent Public Debate over Student Loan Cancellation”
18 See infra “Cancellation Policy Design.”
19 See infra “Supreme Court Review of Cancellation Policy: Procedural History.”
20 See infra “Do Plaintiffs Have Standing to Challenge the Cancellation Policy?”
21 See infra “Is the Cancellation Policy Substantively Valid?”
22 See infra “Is the Cancellation Policy Procedurally Valid?”
23 See, e.g., infra “The Federal Family Education Loan Program” and “The Federal Direct Loan Program.”
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statutes.24 The vast majority of outstanding federal student loans were made under HEA
authorities.25 The Biden Administration has identified only certain HEA loan balances as eligible
for cancellation.26
Plaintiffs in Nebraska and Brown press claims that implicate two HEA loan programs: the Federal
Family Education Loan Program and the William D. Ford Direct Loan Program.
The Federal Family Education Loan Program
Until its authority terminated in June 2010,27 the Federal Family Education Loan Program
(FFELP) facilitated making loans to students and their parents to help finance a higher education.
The FFELP is a federal loan guarantee program. Nonfederal lenders—state entities and certain
private entities28—originated FFELP loans using their own funds. While federal statute required
listed provisions that had to be included in a loan’s note for it to be insurable under the program,29
the original parties to that note were the borrower and the nonfederal lender. The lender was the
loan’s initial holder.30 FFELP loans that remain with lenders are potential revenue sources.31 The
lender receives payments of principal, interest, and other fees.
The FFELP encouraged lending through, among other things, loan guarantees comprised of a
system of insurance offered by guaranty agencies (GAs) and reinsurance of GA insurance by ED.
The Secretary entered agreements with GAs to help administer the FFELP.32 GAs are state or
private nonprofit organizations.33 They serve as an “intermediary” between the lender and ED.34
A lender may invoke an FFELP loan guarantee if a borrower defaults.35 A lender must make
diligent efforts to collect on a defaulted loan.36 If those efforts fail, the lender may file a default

24 For example, Title VII of the Public Health Service Act authorized a federal student loan guarantee program known
as the Health Education Assistance Loan (HEAL) program, which facilitated private lending to students pursuing a
degree in certain healthcare fields. See 42 U.S.C. § 292a. Authority to issue new loan guarantees lapsed in September
1998, id., yet HEAL program loans remain outstanding, see FED. STUDENT AID, U.S. DEP’T OF EDUC., FISCAL YEAR
2021 ANNUAL REPORT 38 fig. 19 (2021), https://www2.ed.gov/about/reports/annual/2021report/fsa-report.pdf; see also
CRS Report R46720, Student Loan Programs Authorized by the Public Health Service Act: An Overview, by Elayne J.
Heisler and Alexandra Hegji.
25 CRS Report R47196, Federal Student Loan Debt Cancellation: Policy Considerations, coordinated by Alexandra
Hegji, at 4 tbl. 1.
26 Federal Student Aid Programs (Federal Perkins Loan Program, Federal Family Education Loan Program, and
William D. Ford Federal Direct Loan Program), 87 Fed. Reg. 61512, 61513 (Oct. 12, 2022).
27 20 U.S.C. § 1071(d).
28 Id. § 1085(d)(1).
29 See, e.g., id. § 1077(a) (stating that “a loan by an eligible lender shall be insurable” under the FFELP program “only
if evidenced by a note or other written agreement” which, among other things, provides for specified payment
deferments); see also id. § 1077a (regulating loan interest rates).
30 See Holder, BLACK’S LAW DICTIONARY (11th ed. 2019) (“Someone who has legal possession of a negotiable
instrument and is entitled to receive payment on it.”).
31 FFELP loans could be sold to third parties after origination and, as discussed below, assigned to guaranty agencies.
Each of these subsequent owners would be the loan’s holder during the time it owned the loan. For ease of reference,
this report refers to lender-held FFELP loans as those held by entities other than a GA or ED.
32 34 C.F.R. § 682.400(a).
33 Id. § 682.200(b) (guaranty agency).
34 Great Lakes Higher Educ. Corp. v. Cavazos, 911 F.2d 10, 15 (7th Cir. 1990).
35 FFELP lenders may file claims with a GA in other circumstances as well, such as when a borrower’s loan is
discharged because of their and permanent disability. See, e.g., 34 C.F.R. § 682.402(c)(8)(i)(A)–(B).
36 Id. § 682.411(a).
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claim with the GA to be compensated for the unpaid balance of principal and accrued interest.37
Upon payment of the default claim, the lender assigns the loan to the GA,38 transferring title to
the loan to the GA.39 Having received title, the GA must itself make diligent efforts to collect
before it, too, may be compensated for unpaid balances under its reinsurance agreement with
ED.40 The GA assigns a defaulted loan to ED upon payment of a reinsurance claim.41
Though the FFELP has not insured new loans since June 2010, more than $200 billion remained
outstanding on FFELP loans at the end of 2022.42 Different entities hold outstanding FFELP
loans.43 At the end of FY2022, borrowers owed lenders—that is, entities other than ED or a GA—
about $103 billion.44
Lenders have used the revenue-generating potential of FFELP loans to access credit markets
through asset-backed securities known as Student Loan Asset-Backed Securities (SLABS). An
asset-backed security is a bond or note whose cash flow derives from an asset such as a third
party’s debt.45 SLABS, in particular, are backed by a pool of pledged student loans, including
FFELP loans. For example, in 2021, the Higher Education Loan Authority of the State of
Missouri (MOHELA or the Missouri Authority) offered SLABS for sale to investors, explaining
that the notes were payable solely from the proceeds of a pool of FFELP loans.46 SLABS generate
returns based on, among other factors, the payments borrowers make on pooled loans.47 An
investor’s expected yield on SLABS thus depends, in part, on predicting how long borrowers will
make payments on pooled loans, with longer time periods translating to greater interest

37 Id. § 682.412(e)(2).
38 See id. § 682.410(b)(5)(vi).
39 See Assign, BLACK’S LAW DICTIONARY (11th ed. 2019) (“To convey in full; to transfer (rights or property) . . . . ).
40 See 20 U.S.C. § 1078(c) (authorizing the Secretary to “enter into a guaranty agreement with any guaranty agency,
whereby the Secretary shall undertake to reimburse it . . . with respect to losses (resulting from the default of the
student borrower) on the unpaid balance of the principal and accrued interest of any insured loan”).
41 34 C.F.R. § 682.409(a)(1).
42 U.S. DEP’T OF EDUC., Federal Student Aid Portfolio Summary, FED. STUDENT AID,
https://studentaid.gov/sites/default/files/fsawg/datacenter/library/PortfolioSummary.xls (last visited Apr. 14, 2023).
43 U.S. DEP’T OF EDUC., Location of Federal Family Education Loan Program Loans, FED. STUDENT AID,
https://studentaid.gov/sites/default/files/fsawg/datacenter/library/LocationofFFELPLoans.xls (last visited Apr. 14,
2023) (describing FFELP loan amounts held by lenders, GAs, and ED).
44 Id.
45 Morgan Tanafon, Market Crises and Dodd-Frank: Does the Act Protect Against Hazardous Student Loan
Securitization?, 38 REV. BANKING & FIN. L. 869, 878 (2019).
46 See HIGHER EDUC. LOAN AUTH. OF THE STATE OF MO., TAXABLE STUDENT LOAN ASSET‑BACKED NOTES, SERIES 2021-
3 OFFERING MEMORANDUM 5 (2021),
https://www.mohela.com/DL/common/publicInfo/investorInformation.aspx?idx=2340 [hereinafter OFFERING
MEMORANDUM] (“The only sources of funds for payment of the Notes issued under the Indenture are the Financed
Eligible Loans and investments pledged to the Trustee and the payments the Issuer receives on those Financed Eligible
Loans and investments.”) (filed as Exh. A to Decl. of Michael E. Talent, Nebraska v. Biden, No. 4:22-cv-01040 (E.D.
Mo. filed Sept. 29, 2022)); see also MO. REV. STAT. § 173.390 (authorizing MOHELA to issue bonds “payable solely
from and secured by a pledge of revenues derived from or by reason of the ownership of student loan notes and
investment income or as may be designated in a bond resolution authorized by the authority”).
47 See U.S. DEP’T OF THE TREASURY, OPPORTUNITIES AND CHALLENGES IN ONLINE MARKETPLACE LENDING 7 fig. 3
(2016),
https://home.treasury.gov/system/files/231/Opportunities_and_Challenges_in_Online_Marketplace_Lending_white_pa
per.pdf (illustrating securitization by direct lenders).
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payments.48 If loan prepayments exceed expectations, then actual yields can fall below expected
yields.49
The Federal Direct Loan Program
Nearly all borrowers who today obtain federal student loans do so under the William D. Ford
Direct Loan Program (FDLP), authorized by Congress in 1993.50 The designation of this federal
credit program as a “direct loan” program means that, when making an FDLP loan, the federal
government disburses funds to a nonfederal borrower under a contract with the borrower that
requires repayment.51 Unlike some other HEA student loan programs, such as the FFELP, the
borrower enters a contractual relationship with the federal government directly upon borrowing
the loan. The federal government is the loan holder, receiving payments of principal, interest, and
other fees on account of the FDLP loan.
The federal government makes several type of loans under the FDLP. Eligible undergraduate
borrowers may receive need-based Direct Subsidized Loans. Undergraduate and graduate
students may obtain Direct Unsubsidized Loans as well. Direct PLUS Loans are available to
graduate students and to the parents of dependent undergraduate students.52
Borrowers may also “consolidate education loans made under certain Federal programs,”53
including loans made under the FFELP, by borrowing a Direct Consolidation Loan.54 Unlike other
FDLP loans, Direct Consolidation Loan proceeds are not used to directly pay tuition, fees, and
similar costs. Instead, ED pays consolidation-loan proceeds to the holder of an existing education
loan to discharge that loan.55 Thus, if a borrower consolidates an existing FFELP loan held by a
lender, ED pays the consolidation proceeds to the FFELP lender to pay the existing loan’s balance
in full.56 Going forward, the borrower makes payments to ED on account of the new Direct
Consolidation Loan.
Among other loan types, ED holds tens of millions of FDLP loans—at the end of FY2022, more
than $1.42 trillion was outstanding on loans made on behalf of 37.8 million recipients.57 To
administer these and other federally held student loans, ED contracts with third-party loan
servicers.58 A loan servicer is a company that ED contracts with “to handle the billing and other

48 See OFFERING MEMORANDUM, supra note 46, at B-2.
49 See OFFERING MEMORANDUM, supra note 46, at 96 (“The rates of payment of principal on the Notes and the yield on
the Notes may be affected by prepayments of the Financed Eligible Loans.”).
50 Student Loan Reform Act of 1993, Pub. L. No. 103-66, tit. IV, § 4011, 107 Stat. 312, 341.
51 See 2 U.S.C. § 661a(1).
52 CRS Report R45931, Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program:
Terms and Conditions for Borrowers, by Alexandra Hegji, at 4–5.
53 34 C.F.R. § 685.220(a).
54 See id. § 685.220(b).
55 Id. § 685.220(f)(2).
56 See id.
57 See supra note 42.
58 See, e.g., 20 U.S.C. § 1087f(b)(2) (authorizing the Secretary to enter into contracts for “the servicing and collection
of loans made or purchased under” the FDLP program).
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services on” an ED-held federal student loan.59 ED engages several servicers60 and allocates
borrower accounts among servicers.61 ED generally pays servicers based on the number and types
of assigned accounts and the work that the servicer performs on ED’s behalf.62
Legislative History and Prior Exercises of the HEROES Act
The Secretary identified the Higher Education Relief Opportunities for Students Act of 2003
(HEROES Act) as statutory authority for the cancellation policy. The Act allows the Secretary to
“waive or modify any statutory or regulatory provision applicable to the” Title IV programs “in
connection with a . . . national emergency” to ensure, among other things, that “affected
individuals are not placed in a worse position financially” in relation to their Title IV assistance.63
The HEROES Act evolved from an earlier HEROES Act of 2001, itself enacted in response to the
terrorist attacks of September 11, 2001.64 The original 2001 version of the statute provided similar
waiver and modification authority for individuals affected by the national emergency declared for
the attacks of September 11, 2001, or a subsequent national emergency declared for a terrorist
attack.65 The 2001 law was subject to a sunset at the end of FY2003.66
Before that sunset date arrived, Congress replaced the statute with the current HEROES Act of
2003.67 The 2003 legislation used a definition of “national emergency” that did not include the
“terrorist attack” qualifier used in the original 2001 law.68 The HEROES Act of 2003 otherwise
resembled the 2001 law in many respects. Under both laws, for example, the Secretary was
empowered to “waive” or “modify” statutory and regulatory provisions applicable to Title IV
programs to bring about certain relief for “affected individuals.”69
Like its predecessor statute, the HEROES Act of 2003 was subject to a two-year sunset.70
Congress extended the HEROES Act authority in 2005 and made the statute permanent in 2007.71

59 U.S. DEP’T OF EDUC., Who’s My Student Loan Servicer?, FED. STUDENT AID, https://studentaid.gov/manage-
loans/repayment/servicers (last visited Apr. 14, 2023); see also CRS Report R44845, Administration of the William D.
Ford Federal Direct Loan Program, by Alexandra Hegji, at 19–20 (describing common servicing activities).
60 U.S. DEP’T OF EDUC., Servicer Loan Portfolio by Loan Status, FED. STUDENT AID,
https://studentaid.gov/sites/default/files/fsawg/datacenter/library/servicer-portfolio-by-loan-status093022.xls (last
visited Apr. 14, 2023).
61 See, e.g., U.S. DEP’T OF EDUC., CONTRACT NO. ED-FSA-11-D-0012 WITH MOHELA 15 (2011) (describing account
allocation) (filed as Exh. B to Decl. of Michael E. Talent, Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. filed Sept.
29, 2022)).
62 See id. at 1 (describing unit pricing for borrowers in different repayment statuses).
63 20 U.S.C. § 1098bb(a)(1).
64 Higher Education Relief Opportunities for Students Act of 2001, Pub. L. No. 107-122, 115 Stat. 2386 (2002).
65 Id. § 5(4), 115 Stat. at 2388.
66 Id. § 6, 115 Stat. at 2389.
67 Higher Education Relief Opportunities for Students Act of 2003, Pub L. No. 108-76, 117 Stat. 904.
68 Id. § 5(4), 117 Stat. at 907.
69 Compare Higher Education Relief Opportunities for Students Act of 2001, Pub. L. No. 107-122, § 2(a)(2), 115 Stat.
2386, 2386 (2002) (authorizing waivers or modifications deemed necessary “to ensure that borrowers of Federal
student loans who are affected individuals are not placed in a worse position financially in relation to those loans
because of their status as affected individuals”), with Higher Education Relief Opportunities for Students Act of 2003,
Pub L. No. 108-76, § 2(a)(2), 117 Stat. at 904 (similar waiver for “recipients of student financial assistance under Title
IV” of the HEA “who are affected individuals”).
70 Id. § 6, 117 Stat. at 908.
71 Student Financial Assistance—Extension, Pub. L. No. 109-78, 119 Stat. 2043 (2005) (extension to September 30,
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Neither of these legislative actions made substantive changes to the waiver or modification
authority provided by the HEROES Act.72
It does not appear that ED has ever invoked the HEROES Act to afford relief as broad as the
cancellation policy announced by Secretary Cardona in 2022. For instance, past Secretaries
invoked the HEROES Act to expand available forbearance relief for certain Federal Perkins Loan
borrowers “who reside or are employed in a disaster area.”73 In doing so, however, the Secretaries
did not forgive or cancel any outstanding loan balances and also did not modify the rule that
interest ordinarily accrues during forbearance.74 Past Secretaries likewise invoked the HEROES
Act to suspend the collection of defaulted loans from borrowers “who reside or are employed in a
disaster area,”75 but these did not expressly contemplate forgiveness or cancellation of such
defaulted loan balances. Other early examples of HEROES Act use include waivers and
modifications that addressed loan deferrals, extensions of the maximum period of loan
forbearance, and waivers of the requirement that students return overpayments of certain grant
funds.76
The scope of HEROES Act waivers grew during the COVID-19 pandemic. On March 20, 2020,
then-Secretary of Education Betsy DeVos announced that “[a]ll borrowers with federally held
student loans” would “automatically have their interest rates set to 0% for a period of at least 60
days.”77 The Secretary also offered such borrowers “the option to suspend their payments for at
least two months.”78 A week later, Secretary DeVos announced that ED would also “halt
collection actions and wage garnishments to provide additional assistance to borrowers.”79 While
neither of the Secretary’s March 2020 announcements specified the statutory authority she

2007); Higher Education—Permanent Extension of Waiver Authority, Pub. L. No. 110-93, § 2, 121 Stat. 999 (2007)
(permanent authorization).
72 See id.
73 See, e.g., Federal Student Aid Programs (Student Assistance General Provisions, Federal Perkins Loan Program,
Federal Direct Loan Program, Federal Family Education Loan Program and the Federal Pell Grant Program), 68 Fed.
Reg. 69312, 69314–15, 69316 (Dec. 12, 2003) [hereinafter 2003 Federal Register Notice] (“Under [the HEA and its
implementing regulations], there is a 3-year cumulative limit on the length of forbearances that a Federal Perkins Loan
borrower can receive. To assist Perkins borrowers who are affected individuals in this category, the Secretary is
waiving these statutory and regulatory requirements so that any forbearance based on a borrower’s status as an affected
individual is excluded from the 3-year cumulative limit.”).
74 Compare 34 C.F.R. § 674.33(d)(7) (specifying that “[i]nterest accrues during any period of forbearance” on a Federal
Perkins Loan), with, e.g., 2003 Federal Register Notice, supra note 73, at 69316.
75 See 2003 Federal Register Notice, supra note 73, at 69314–16 (“In accordance with [ED regulations], schools and
guaranty agencies must attempt to recover amounts owed from defaulted Perkins and FFEL[P] borrowers. The
Secretary is waiving the regulatory provisions that require schools and guaranty agencies to attempt collection on
defaulted loans for the time period during which the borrower is an affected individual. The school or guaranty agency
may stop collection activities upon notification by the borrower, a member of the borrower’s family, or another reliable
source that the borrower is an affected individual in this category.”) (emphasis added).
76 See Use of the HEROES Act of 2003 to Cancel the Principal Amounts of Student Loans, 46 O.L.C. ___, slip op, at
*4 (Op. O.L.C. Aug. 23, 2022), https://www.justice.gov/d9/2022-11/2022-08-23-heroes-act.pdf [hereinafter OLC
Opinion].
77 Delivering on President Trump’s Promise, Secretary DeVos Suspends Federal Student Loan Payments, Waives
Interest During National Emergency, U.S. DEP’T OF EDUC. (Mar. 20, 2020),
https://content.govdelivery.com/accounts/USED/bulletins/2823e37 [hereinafter March 20, 2020 Announcement].
78 Id.
79 Secretary DeVos Directs FSA to Stop Wage Garnishment, Collections Actions for Student Loan Borrowers, Will
Refund More than $1.8 Billion to Students, Families, U.S. DEP’T OF EDUC. (Mar. 25, 2020),
https://content.govdelivery.com/accounts/USED/bulletins/28317e2 [hereinafter March 25, 2020 Announcement].
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invoked to grant this relief,80 ED later clarified that the Secretary based the relief on the HEROES
Act.81
Congress subsequently enacted the Coronavirus Aid, Relief, and Economic Security (CARES)
Act.82 Section 3513(a) of the CARES Act required the Secretary to “suspend all payments due”
for ED-held FDLP and FFELP loans through September 30, 2020.83 Section 3513(e) in turn
required the Secretary to “suspend all involuntary collection related to” such loans during Section
3513(a)’s payment suspension period.84 Section 3513(b) provided that interest would not accrue
on those loans during the suspension period.85 Section 3513 was subject to a sunset date of
September 30, 2020.86
In August 2020, as Section 3513’s sunset date approached, Secretary DeVos “extend[ed] the
student loan relief to borrowers initiated by the President and Secretary in March 2020 through
December 31, 2020.”87 Like the March 2020 relief, ED based the August 2020 extension on the
HEROES Act.88 The Trump and Biden Administrations have since extended Section 3513
repeatedly.89 The payment pause continues in effect as of this publication. Under the most recent
extension, it will last, at the latest, until August 29, 2023 (i.e., 60 days after June 30, 2023). If the
Supreme Court resolves the student loan litigation before June 30, then the payment pause will
end 60 days after the date of the Court’s decision.90
Recent Public Debate over Student Loan Cancellation
The Biden Administration expressly describes its announced cancellation policy as a response to
the COVID-19 pandemic. However, Congress has considered legislation to provide broad-based
student loan cancellation since at least as early as 2019. During the first session of the 116th

80 See March 20, 2020 Announcement, supra note 77; March 25, 2020 Announcement, supra note 79.
81 FED. STUDENT AID, ANNUAL REPORT FY 2020, at 38 (2020), https://www2.ed.gov/about/reports/annual/
2020report/fsa-report.pdf [hereinafter FSA Annual Report] (“The relief provided to borrowers from March 13, 2020
through March 26, 2020 . . . was provided under the Secretary’s authority in the [HEROES Act].”); Secretary DeVos
Extends Student Loan Forbearance Period Through January 31, 2021, in Response to COVID-19 National Emergency,
U.S. DEP’T OF EDUC. (Dec. 4, 2020), https://www.ed.gov/news/press-releases/secretary-devos-extends-student-loan-
forbearance-period-through-january-31-2021-response-covid-19-national-emergency [hereinafter December 2020
Announcement] (stating that the Secretary “used her authority under the HEROES Act” to implement the March 2020
relief).
82 Pub. L. No. 116-136, 134 Stat. 281 (2020).
83 Id. § 3513(a) (codified at 20 U.S.C. § 1001 note).
84 Id. § 3513(e).
85 Id. § 3513(b).
86 Id. § 3513(a).
87 U.S. DEP’T OF EDUC., Secretary DeVos Fully Implements President Trump’s Presidential Memorandum Extending
Student Loan Relief to Borrowers Through End of Year (2020),
https://content.govdelivery.com/accounts/USED/bulletins/29b4634 [hereinafter August 2020 Announcement].
88 See Federal Student Aid Programs (Student Assistance General Provisions, Federal Perkins Loan Program, William
D. Ford Federal Direct Loan Program, and Federal-Work Study Programs), 85 Fed. Reg. 79856–57, 79862 (Dec. 11,
2020) [hereinafter 2020 Federal Register Notice]; FSA Annual Report, supra note 81, at 38.
89 See, e.g., Federal Student Aid Programs (Federal Perkins Loan Program, Federal Family Education Loan Program,
and William D. Ford Federal Direct Loan Program), 87 Fed. Reg. 61512, 61513–14 (Oct. 12, 2022) (listing
extensions). See also CRS Legal Sidebar LSB10568, The Biden Administration Extends the Pause on Federal Student
Loan Payments: Legal Considerations for Congress, by Kevin M. Lewis and Edward C. Liu.
90 See COVID-19 Emergency Relief and Federal Student Aid, FED. STUDENT AID,
https://studentaid.gov/announcements-events/covid-19 (last visited Apr. 14, 2023).
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Congress, some Members introduced bills to cancel, to varying degrees, portions of outstanding
federal student loan debt.91 Proponents of these proposals generally argued that cancellation
would address a student debt crisis that arose because of increasing tuition costs.92 However, as
the COVID-19 pandemic progressed, some Members suggested bills providing for student loan
cancellation as a means of addressing the economic impact of the pandemic on borrowers.93
In 2020, Congress considered omnibus legislation called the Heroes Act (not to be confused with
the HEROES Act of 2003), which would have addressed a wide variety of pandemic-related
issues.94 Although the House of Representatives passed a version of the bill that would have
directed the Secretary to cancel or repay up to $10,000 of student loan debt for “economically
distressed borrowers,” Congress ultimately did not enact that measure.95 The following year,
Congress enacted the American Rescue Plan Act of 2021 (ARPA), which included a provision
amending the treatment of discharged student loans for federal income tax purposes.96
In addition to these legislative proposals, academics and some Members of Congress suggested
the possibility of executive action to discharge student loan balances based on existing statutory
authorities.97 In January 2021, ED under the outgoing Trump Administration concluded that the
HEROES Act did not authorize cancellation of student loan balances, a decision that the Office of
Legal Counsel (OLC) of the Department of Justice (DOJ) rejected in 2022 in concert with the
Biden Administration’s announcement of the cancellation policy.98

91 Student Debt Cancellation Act of 2019, H.R. 3448, 116th Cong. (2019) (authorizing cancellation of federal student
loan balances as well as authorizing ED to purchase, and subsequently cancel, outstanding private education loans);
College for All Act of 2019, S. 1947, 116th Cong. (2019) (same); Student Loan Debt Relief Act of 2019, H.R. 3887,
116th Cong. (2019) (authorizing cancellation of up to $50,000 of federal student loan balances for borrowers, subject to
an income phase-out between $100,000 and $250,000), S. 2235, 116th Cong. (2019) (same).
92 See Senator Warren, House Majority Whip Clyburn Introduce Legislation to Cancel Student Loan Debt for Millions
of Americans, SEN. ELIZABETH WARREN (July 23, 2019), https://www.warren.senate.gov/newsroom/press-
releases/senator-warren-house-majority-whip-clyburn-introduce-legislation-to-cancel-student-loan-debt-for-millions-
of-americans; AFT President Randi Weingarten on Sen. Warren’s Student Debt and College Affordability Proposals,
AM. FED’N OF TEACHERS (Apr. 22, 2019), https://www.aft.org/press-release/aft-president-randi-weingarten-sen-
warrens-student-debt-and-college.
93 See, e.g., Student Loan Forgiveness for Frontline Health Care Workers Act, H.R. 6720, 116th Cong. (2020)
(providing for partial cancellation of student loan balances for certain health care professions engaged in COVID-
related health services); Frontline Health Care Worker Student Loan Assistance Act of 2020, H.R. 8393, 116th Cong.
(2020) (providing a smaller degree of cancellation for similar borrowers). But see, Student Loan Relief Act, H.R. 8514,
116th Cong. (2020) (providing up to $25,000 of cancellation of student loan balances for all borrowers).
94 See The Heroes Act, H.R. 6800, 116th Cong. (2020).
95 Id. at Div. O, Title I, § 150117.
96 American Rescue Plan Act of 2021, Pub. L. No. 117-2, tit. IX, § 9675, 135 Stat. 4, 185–86. This provision is
discussed in more detail below under “Tax Revenue Injury.”
97 See Luke Herrine, The Law and Political Economy of A Student Debt Jubilee, 68 BUFF. L. REV. 281 (2020); Chuck
Schumer Says Biden Could Forgive $50,000 in Student Debt with Executive Order, CNBC (Nov. 17, 2020),
https://www.cnbc.com/2020/11/16/schumer-suggests-student-debt-forgiveness-through-executive-order.html; H.R.
Res. 100, 117th Cong. (2021) (calling on the President of the United States to take executive action to broadly cancel
Federal student loan debt); S. Res. 46, 117th Cong. (2021) (same).
98 Memorandum from Reed D. Rubinstein, Principal Deputy General Counsel of the U.S. Department of Education, to
Betsy DeVos, Secretary of Education (Jan. 12, 2021),
https://static.politico.com/d6/ce/3edf6a3946afa98eb13c210afd7d/ogcmemohealoans.pdf [hereinafter Rubinstein
Memo]; OLC Opinion, supra note 76. These competing interpretations are discussed in more detail below at “Waiver,
Modification, and the Major-Questions Doctrine.”
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Cancellation Policy Design
On August 24, 2022, Secretary of Education Miguel Cardona determined that he would exercise
asserted authority under the HEROES Act to provide relief to student loan borrowers in
connection with the pandemic.99 Secretary Cardona decided he would extend the payment pause
until December 31, 2022, and that this would be the “final extension” of the pause.100 However,
the Secretary found that “many borrowers” would be at “heightened risk of loan delinquency and
default” once payment resumed in 2023.101 If borrowers fell into delinquency or default, they
would be “worse off than they were before the pandemic,” even accounting for the benefits
afforded them by the payment pause.102 To avoid this result, Secretary Cardona decided that he
would waive and modify statutory and regulatory provisions to discharge federal student loan
balances.103
The Secretary’s August 24 announcement was followed roughly five weeks later by a
modification to ED’s website affecting cancellation eligibility for Direct Consolidation Loans. On
September 29, within hours of the Nebraska plaintiffs filing suit,104 ED announced that a
borrower’s Direct Consolidation Loan would be eligible for cancellation only if it derived from a
consolidation application filed with ED on or before September 29 (the consolidation limit).105
The Nebraska plaintiffs characterize this development as a “change” to the policy.106 These
aspects of the cancellation policy are discussed below.
August 2022 Cancellation Eligibility
In his initial directives about the cancellation policy, the Secretary settled on three related criteria
to identify borrowers eligible to receive cancellation and the amount of cancellation benefits they
would receive.
The Secretary’s first two eligibility criteria would work in tandem to identify borrowers and loans
eligible to receive cancellation. First, ED would use income thresholds to identify borrowers with
eligible loan types who could receive cancellation. Thresholds differ based on a borrower’s
taxpayer status and would use adjusted gross income (AGI) in tax years 2020 or 2021.107 Those
who file individually (whether single or married) would be eligible if their AGI was less than
$125,000 in either tax year. Those who file jointly, as head of household, or as a qualifying

99 Cardona Memo, supra note 1, at 1.
100 Id. at 2.
101 Id. at 1.
102 Id.
103 Id.
104 The federal petitioners do not appear to dispute that the Nebraska plaintiffs filed their complaint before ED’s
website vendor published the consolidation limit on the Federal Student Aid website. Compare Br. of Pet’rs’ at 25,
Biden v. Nebraska, No. 22-506, and Dep’t of Educ. v. Brown, No. 22-535 (U.S. Jan. 4, 2023) (describing the
consolidation limit as “a decision the Department made before the States sued and announced and made effective the
day they sued”) [hereinafter Federal Pet’rs’ Br.], with Br. of Resp’ts’ at 10, Biden v. Nebraska, No. 22-506 (U.S. Jan.
27, 2023) [hereinafter State Pls.’ Br.].
105 See infra “Consolidation Injury.”
106 See State Pls.’ Br., supra note 104, at 10–11.
107 The Secretary’s initial memorandum referred only to “income” generally. See Cardona Memo, supra note 1, at 1. In
later publications concerning the policy, ED has used Adjusted Gross Income to describe the income thresholds. See
Federal Student Aid Programs (Federal Perkins Loan Program, Federal Family Education Loan Program, and William
D. Ford Federal Direct Loan Program), 87 Fed. Reg. 61512, 61514 (Oct. 12, 2022).
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widow or widower would be eligible if their AGI was less than $250,000 in either tax year.108
Second, ED would apply cancellation benefits to only certain federal student loans. Cancellation
would be available for FDLP loans and FFELP loans held by a GA or by ED that had been
disbursed as of June 30, 2022.109 Direct Consolidation Loans would also be eligible for
cancellation, provided the loan’s proceeds were used to consolidate education loans outstanding
as of the June 30, 2022, cutoff.110 But FFELP loans held by a lender would not be eligible for
cancellation.
The Secretary’s income threshold and loan type criteria identify the borrowers eligible to receive
cancellation benefits. A third criterion identifies the amount of benefits eligible borrowers would
receive. The Secretary decided that all eligible borrowers would receive up to $10,000 in
cancellation benefits.111 Eligible borrowers would receive up to an additional $10,000 in
cancellation benefits, for up to $20,000, if they had received a Pell Grant at any point.112 ED
awards Pell Grants to “help financially needy students meet the cost of their postsecondary
education.”113
September 2022 Consolidation Limit
FFELP loans held by a lender are not, themselves, eligible for cancellation under the policy. Even
so, borrowers with such loans initially had a route to gain cancellation eligibility: consolidation
into the FDLP. Take a borrower with only lender-held FFELP loans who met the cancellation
policy’s applicable income threshold and was otherwise able to obtain a Direct Consolidation
Loan.114 The lender-held FFELP loans would not themselves be eligible for cancellation. After
consolidation of these loans into the FDLP, though, the new Direct Consolidation Loan would be
eligible for cancellation because the Direct Consolidation Loan would consolidate only loans that
disbursed before June 30, 2020.115
ED’s initial public statements about the cancellation eligibility of Direct Consolidation Loans did
not state a deadline by which a borrower would need to apply for consolidation into the FDLP. In
September 2022, ED decided to revise its website to explain that “consolidation loans comprised

108 87 Fed. Reg. at 61514. ED decided to use parental income for enrolled dependent student borrowers. See, e.g.,
Supporting Analysis, supra note 10, at 12.
109 See Cardona Memo, supra note 1, at 1. Secretary Cardona also listed Perkins Loans held by ED as among the loan
types eligible for cancellation. Id. Neither Nebraska nor Brown implicate Perkins Loans.
110 See, e.g., One-Time Student Loan Debt Relief, FED. STUDENT AID (pdf version of Department of Education website
as it existed on September 28, 2022) (stating that Direct Consolidation Loans would be eligible for cancellation if
“[u]nderlying loans disbursed on or before June 30, 2022”) (filed as Exh. E to Decl. of James A. Campbell, Nebraska v.
Biden, No. 4:22-cv-01040 (E.D. Mo. filed Oct. 11, 2022)).
111 See Cardona Memo, supra note 1, at 1.
112 See id.
113 34 C.F.R. § 690.1; see also generally CRS Report R45418, Federal Pell Grant Program of the Higher Education
Act: Primer, by Cassandria Dortch.
114 See 34 C.F.R. § 685.220(d) (describing eligibility rules for obtaining a Direct Consolidation Loan, such as a
requirement that at the time the borrower applies for the loan the borrower is not “subject to a judgment secured
through litigation, unless the judgment has been vacated[,]” on the “loans being consolidated”); see also 20 U.S.C.
§§ 1078-3(a)(3), 1087e(g).
115 See supra note 27 and accompanying text (noting that authority to make FFELP loans terminated in 2010 so that all
FFELP loans were necessarily disbursed before the cancellation policy’s June 30, 2022 cut-off).
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of any FFELP or Perkins loans not held by ED are also eligible, as long as the borrower applied
for consolidation before Sept. 29, 2022.”116
ED communicated these changes to the private firm that serves as website vendor for the Federal
Student Aid website on September 28, 2022—the day before the complaint in Nebraska was
filed—and the changes were visible to the public the next day, September 29.117 Borrowers of
lender-held FFELP loans could still apply for consolidation on or after September 29, but the
resulting loan would not be eligible for cancellation.118 In another revision to its website made
public on September 29, ED stated that it was “assessing whether there are alternative pathways
to provide relief to borrowers with federal student loans not held by ED,” including FFELP
loans.119 To date, ED has not identified an alternative cancellation pathway for federal student
loans that are not held by ED.
On October 12, 2022, ED published the waivers and modifications that comprise the policy in the
Federal Register.120 These published waivers include the consolidation limit.121
ED’s “Supporting Analysis”
As ED deliberated on the cancellation policy, it prepared a paper that “summarizes the basis for
and key design elements of” the initiative.122 The federal petitioners refer to this document as
ED’s “Supporting Analysis.”123 They have relied on the Supporting Analysis in the student loan
litigation as the main evidence of why the cancellation policy is necessary to ensure that
borrowers are not placed in a worse position financially in relation to their federal student loans
because of the pandemic.124 The Supporting Analysis expresses three general conclusions relevant
to the litigation: (1) that borrowers face a heightened delinquency or default risk with the end of
the payment pause; (2) that, in general, the cancellation of student loan balances would avert such
risks; and (3) that the policy’s income and Pell Grant eligibility criteria reasonably cabined
benefit eligibility to borrowers who need it.
First, the Supporting Analysis determined that ending the payment pause would expose borrowers
to a heightened delinquency or default risk on their federal student loans.125 For purposes of
federal student loans, a borrower is current on a loan if the borrower makes a monthly payment

116 One-Time Student Loan Debt Relief, FED. STUDENT AID (Sept. 28, 2022 copy edit document showing changes to
ED’s website in redline form) (filed as Exhibit D to Decl. of James Richard Kvaal, Nebraska v. Biden, No. 4:22-cv-
01040 (E.D. Mo. filed Oct. 7, 2022)).
117 See Decl. of James Richard Kvaal at ¶ 4, Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. Oct. 7, 2022).
118 See supra note 116.
119 One-Time Student Loan Debt Relief, FED. STUDENT AID (Sept. 28, 2022 copy edit document showing changes to
website content in redline form) (filed as Exhibit D to Decl. of James Richard Kvaal, Nebraska v. Biden, No. 4:22-cv-
01040 (E.D. Mo. filed Oct. 7, 2022)).
120 Federal Student Aid Programs (Federal Perkins Loan Program, Federal Family Education Loan Program, and
William D. Ford Federal Direct Loan Program), 87 Fed. Reg. 61512 (Oct. 12, 2022).
121 Id. at 61514 (“Direct Consolidation loans disbursed after June 30, 2022, and for which the repaid loans include a
FFEL loan not held by ED, are only eligible for relief if the borrower submitted an application to consolidate such
loans prior to September 29, 2022.”).
122 Supporting Analysis, supra note 10, at 1.
123 Federal Pet’rs’ Br., supra note 104, at 9.
124 See, e.g., Federal Pet’rs’ Br., supra note 104, at 44 (relying on the Supporting Analysis to argue that the cancellation
policy’s income eligibility criterion is appropriately tailored to benefit borrowers at risk of delinquency or default after
the payment pause ends).
125 Supporting Analysis, supra note 10, at 1.
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within 30 days of its due date.126 If the borrower does not make a monthly payment within 30
days of its due date, the borrower is then delinquent until the point when the borrower either
returns to current status or defaults.127 A borrower defaults by failing to make a monthly payment
within 270 days of its due date.128
To gauge default and delinquency risks, ED looked first to the payment behavior of borrowers
affected by certain 2017 natural disasters who were in mandatory administrative forbearance.129
Default rates among these borrowers spiked once forbearance ended.130 In the year before the
disaster declaration that led to the forbearance, 0.3% of borrowers entered default, whereas 6.5%
entered default in the calendar year after exiting forbearance.131 Increases in default rates were
even higher among Pell Grant recipients.132
ED also found evidence of delinquency and default risk in data from a survey of borrowers, who
expected that despite the payment pause they would have more difficulty making full loan
payments post-pandemic than they had pre-pandemic.133 ED explained that other studies of
delinquency rates for debts not affected by the payment pause (e.g., non-student loan debt)
confirmed the views expressed in the borrower survey.134
Second, the Supporting Analysis found that loan cancellation could reduce delinquency and
default risks by reducing or eliminating the amount that borrowers would have to repay each
month.135 If ED provided up to $20,000 in cancellation and all eligible borrowers claimed that
benefit, 20 million borrowers would have no remaining student loan balance and thus no risk of
falling into delinquency or default on such debt.136 With full participation by eligible borrowers,
another 23 million would still have amounts owing after application of cancellation benefits.137
ED would reamortize the loans of borrowers with remaining balances, and their monthly
payments would decline by an estimated $200 to $300.138 ED estimated that the payment pause,
by comparison, saved the average borrower in repayment $233 per month.139
Third, the Supporting Analysis explained use of borrower income as a cancellation-policy
eligibility criterion.140 ED determined that the higher a borrower’s income, the more likely the

126 FED.STUDENT AID, DEP’T OF EDUC., FISCAL YEAR 2022 ANNUAL REPORT 33 (2023),
https://www2.ed.gov/about/reports/annual/2022report/fsa-report.pdf.
127 Id.
128 20 U.S.C. § 1085(l).
129 Supporting Analysis, supra note 10, at 2 (examining borrowers affected by hurricanes as well as wildfires in
northern California).
130 Supporting Analysis, supra note 10, at 2.
131 Supporting Analysis, supra note 10, at 2.
132 Supporting Analysis, supra note 10, at 2 (noting that 7% of Pell borrowers “enter[ed] default in the calendar year
after exiting mandatory administrative forbearance compared to 5 percent” of borrowers who were not Pell Grant
recipients).
133 Supporting Analysis, supra note 10, at 2–3.
134 See, e.g., Supporting Analysis, supra note 10, at 3 (stating that data from the Federal Reserve Bank of New York
showed that delinquency rates on student loans not affected by the payment pause had returned to pre-pandemic levels).
135 Supporting Analysis, supra note 10, at 4.
136 Supporting Analysis, supra note 10, at 5.
137 Supporting Analysis, supra note 10, at 5.
138 Supporting Analysis, supra note 10, at 5.
139 Supporting Analysis, supra note 10, at 5.
140 Supporting Analysis, supra note 10, at 6.
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borrower could make timely payments on their federal student loans.141 In particular, as compared
to their lower-income counterparts, borrowers in higher income categories made loan payments
more consistently; expressed a greater ability to repay future loans; were less likely to report
financial insecurity; and were less likely to have lost employment at the beginning of the
pandemic.142 In some cases, ED found that there were particularly large differences in repayment
capacity between borrowers who made less than $125,000 and those who made more than
$125,000.143 As a result, ED determined that the “$125,000 income mark” would be “a reasonable
ceiling for discharge eligibility.”144
The Supporting Analysis also contended that a borrower’s past receipt of a Pell Grant, another
policy eligibility criterion, helped predict a borrower’s delinquency or default risk in ways that a
borrower’s current income alone could not.145 As ED explained, a borrower’s Pell Grant
eligibility was based on family financial resources at the time of Pell Grant application, when
recipients tended to have “lower wealth and familial monetary resources” than nonrecipients.146
While this determination relates to the status of a Pell Grant recipient at the time of application
for the grant, ED also found significant differences in borrower repayment between Pell Grant
recipients and nonrecipients.147 In every imputed income band, a Pell Grant recipient was about
twice as likely to have defaulted on their loans as a non-Pell Grant recipient borrower in the same
band six to ten years after entering repayment.148
Budgetary Impacts of HEROES Act Uses
One facet of the lawsuits challenging the cancellation policy is the magnitude of the economic
impact of this exercise of the HEROES Act. According to the plaintiffs, the dimensions of the
policy show that ED proposes to use the HEROES Act to address a question of major economic
as well as political significance. Thus, plaintiffs urge the Supreme Court to apply the “major-
questions doctrine” to assess whether the statute authorizes the policy.149 The federal petitioners
respond, in part, by focusing on the financial effects of the payment pause,150 portions of which
ED implemented using HEROES Act authority. Given the “permanent and substantial effects” of
this prior use of the HEROES Act, the federal petitioners contend that the cancellation policy is

141 Supporting Analysis, supra note 10, at 6.
142 Supporting Analysis, supra note 10, at 7–10.
143 See, e.g., Supporting Analysis, supra note 10, at 8 (“There is a break in repayment capacity at around $125,000.
After forbearance, nearly 20 percent of borrowers earning between $100,000 and $124,000 expect to experience
difficulty repaying loans, comparted to 14 percent of those earning above $125,000.”); id. at 7, 9 (stating that
inconsistent payment rates and expressions of financial insecurity for borrowers in the $100,000 to $124,000 income
band are about double the rates of borrowers with incomes between $125,000 and $149,000).
144 Supporting Analysis, supra note 10, at 7. The Supporting Analysis does not expressly relate indicators of a
borrower’s ability to repay student loans to household income as opposed to individual income. Id. at 6.
145 Supporting Analysis, supra note 10, at 11 (describing Pell Grant recipient status as an “independent and valuable”
indicator of delinquency or default risk).
146 Supporting Analysis, supra note 10, at 11.
147 Supporting Analysis, supra note 10, at 12.
148 Supporting Analysis, supra note 10, at 12.
149 See State Pls.’ Br., supra note 104, at 31.
150 Federal Pet’rs’ Br., supra note 104, at 51.
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not an “unheralded” exercise of claimed statutory authority and thus is not on par with those
administrative actions the Court has invalidated in its major-questions cases.151
While the economic impact of the payment pause and the cancellation policy could perhaps be
framed in more than one way, the parties have quantified the economic impacts of ED’s actions
by citing their estimated budgetary costs. The Federal Credit Reform Act of 1990 prescribes how
agencies measure and account for these costs.152
When an agency makes a direct loan or loan guarantee, it estimates the “cost” to the federal
government of that commitment.153 In simplified terms, this “cost” figure estimates the value to
the government, when the commitment is made, of the future cash flows of a loan or loan
guarantee.154 Cash flows are amounts the agency expects to pay to and receive from a third party
over the lifetime of the commitment, stated in today’s dollars.155 The agency obligates existing
budget authority to cover this cost when it originates a direct loan or makes a loan guarantee.156 If
an agency then modifies a commitment—for example, by exercising “administrative discretion
under existing law” to change a commitment’s terms157—in a way that increases the estimated
cost of the outstanding direct loan or loan guarantee, the agency obligates more budget authority
to cover the increased cost.158
ED used HEROES Act authority to extend the payment pause originally instituted by the CARES
Act.159 By suspending loan repayment and interest accrual on covered federal student loans, the
payment pause increased the cost to the federal government of having made the loans. The exact
extent of the cost increase is unclear because there does not appear to be a public estimate of the
cost of the entire HEROES Act payment pause from October 2020 to the present. ED states that
the payment pause extensions made during FY2021 resulted in increased costs of $49.5 billion,
while the extensions made during FY2022 increased costs by an additional $48.6 billion.160

151 Federal Pet’rs’ Br., supra note 104, at 51.
152 2 U.S.C. § 661a, et seq.
153 2 U.S.C. § 661c(d). ED estimates initial and updated costs on a cohort basis, grouping together in a single cohort all
of the direct loans (or loan guarantees) made in a given fiscal year. See FED.STUDENT AID, U.S. DEP’T OF EDUC., FISCAL
YEAR 2022 ANNUAL REPORT 170 (2023), https://www2.ed.gov/about/reports/annual/2022report/fsa-report.pdf.
154 2 U.S.C. § 661a(5).
155 See id. § 661a(5)(B)–(C). According to the Government Accountability Office (GAO), there is no FDLP cohort
whose borrowers have all finished repaying their loans. Thus, as of 2022, ED continued to monitor the “costs” of the
FDLP’s inaugural, Fiscal Year 1994 loan cohort, as well as all subsequent cohorts. See GOV’T ACCOUNTABILITY OFF.,
STUDENT LOANS: EDUCATION HAS INCREASED FEDERAL COST ESTIMATES OF DIRECT LOANS BY BILLIONS DUE TO
PROGRAMMATIC AND OTHER CHANGES, GAO-22-105365, at 7–8 (2022) [hereinafter DIRECT LOAN COST REPORT].
156 See 2 U.S.C. § 661c(d).
157 Id. § 661a(9).
158 See OFF. OF MGMT. & BUDGET, EXEC. OFF. OF THE PRESIDENT, CIRCULAR NO. A-11: PREPARATION, SUBMISSION, AND
EXECUTION OF THE BUDGET § 185.7 (rev. Aug. 2022).
159 See Pub. L. No. 116-36, § 3513(a)–(b), 134 Stat. 281, 404 (2020). ED has stated that for a thirteen-day period
preceding enactment of the CARES Act it also used the HEROES Act to provide similar payment relief to borrowers.
See FED. STUDENT AID, U.S. DEP’T OF EDUC., FISCAL YEAR 2020 ANNUAL REPORT 38 (2020),
https://www2.ed.gov/about/reports/annual/2020report/fsa-report.pdf. No public estimate of the costs of this relief
appears to exist.
160 See U.S. DEP’T OF EDUC., FY 2022 AGENCY FINANCIAL REPORT 21, 69 (2023),
https://www2.ed.gov/about/reports/annual/2022report/agency-financial-report.pdf (explaining that the FY2022 cost
increase included the cost of extending the payment pause through December 31, 2022).
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According to the Government Accountability Office (GAO), the payment pause in effect between
October 2020 and May 2022 increased the cost of FDLP loans by $77.8 billion.161
The cancellation policy would also affect the cost to the government of federal student loans by
discharging all or part of an eligible loan’s outstanding balance. As a result of this discharge, the
federal government would forgo payments of principal and accrued interest that it once estimated
it would receive. By canceling principal, the federal government would also forgo interest that
would have accrued on this principal. Cost estimates for the policy vary. ED estimates that for all
eligible loan cohorts, cancellation would result in a roughly $379 billion cost increase.162 The
Congressional Budget Office (CBO) places the cost of cancellation at about $400 billion.163 The
two cost estimates diverge because, among other things, they rest on different assumptions about
the number of eligible borrowers who would apply for cancellation.164
Supreme Court Review of Cancellation Policy:
Procedural History
The Supreme Court has accepted jurisdiction over two cases challenging the cancellation policy,
Nebraska v. Biden and Brown v. U.S. Department of Education. Different plaintiffs brought the
two cases, and the cases were heard in different lower courts. The two groups of plaintiffs
describe different types of harm that the cancellation policy would allegedly cause, and the
plaintiffs raise different claims to avert this alleged harm. The paths that each of these cases
traveled to the Supreme Court are summarized below.

161 GOV’T ACCOUNTABILITY OFF., DIRECT LOAN COST REPORT, supra note 155, at 14. Relying on GAO’s analysis, the
federal petitioners argue that “previous invocations of the [HEROES] Act had permanent and substantial economic
effects. Most significantly, the previous COVID-19 relief measures, including the suspension of loan payments and
interest accrual, are estimated to have cost the federal government $102 billion.” Federal Pet’rs’ Br., supra note 104, at
51 (emphasis added). This $102 billion figure adds the $77.8 billion cost of the payment pause that is attributable to the
HEROES Act to the $24.6 billion cost that is attributable to the CARES Act. However, costs incurred because of the
CARES Act seem not relevant to the federal government’s argument concerning payment-pause-cost figures, which is
that the cancellation policy is not an “unheralded” use of HEROES Act authority. See also Transcript of Oral Argument
at 31:24, Dep’t of Educ. v. Brown, No. 22-535 (Feb. 28, 2023) (statements at oral argument by the federal petitioners
that the payment pause had cost “150 billion dollars”),
https://www.supremecourt.gov/oral_arguments/argument_transcripts/2022/22-535_ba7d.pdf.
162 See ED Cost Estimate, supra note 11.
163 Letter from Phillip L. Swagel, Director, Congressional Budget Office, to Richard Burr, Ranking Member,
Committee on Health, Education, Labor, and Pensions, U.S. Senate, and Virginia Foxx, Ranking Member, Committee
on Education and Labor, U.S. House of Representatives at 3 (Sept. 26, 2022), https://www.cbo.gov/system/files/2022-
09/58494-Student-Loans.pdf (last visited Apr. 14, 2023) [hereinafter CBO Cost Estimate]. CBO estimated that $430
billion in loan balances will be canceled under the policy. See id. CBO set its “cost” estimate lower, though, because it
concluded a portion of canceled balances would, under current law, already have been discharged under programs such
as income-driven repayment plans. See id.
164 Compare ED Cost Estimate, supra note 11 (assuming an 81% participation rate), with CBO Cost Estimate, supra
note 163 (assuming “90 percent of income-eligible borrowers will apply for debt cancellation”).
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Nebraska v. Biden
The first filed of these cases is captioned Nebraska v. Biden, initiated by a complaint filed in the
U.S. District Court for the Eastern District of Missouri on September 29, 2022.165 The plaintiffs in
Nebraska are six states: Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina.166
The Nebraska complaint includes three counts. Count 1 is titled “Separation of Powers” and
alleges that the cancellation policy is “ultra vires” and “violates the separation of powers”
because the HEROES Act does not authorize the policy.167 Count 2 claims that the policy violates
the Administrative Procedure Act (APA) because ED adopted the policy in excess of its statutory
authority.168 Count 3 asserts that the policy violates the APA because it is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.”169 Whereas Counts 1 and 2 mainly
focus on the asserted lack of statutory authority for the policy,170 Count 3 claims that the
Secretary’s decision to adopt the policy did not result from reasoned decisionmaking.171
Along with their complaint, the Nebraska plaintiffs filed a motion for a preliminary injunction.172
The Nebraska plaintiffs asked the district court to enjoin the federal petitioners from
implementing or enforcing the policy because, at that time, ED had said that it would “start
cancelling loan balances” for certain borrowers as early as October 2022,173 a move that
assertedly would have inflicted harm on the plaintiffs.
On October 20, the district court denied the Nebraska plaintiffs’ motion and dismissed the suit.174
The district court did not reach the merits of the plaintiffs’ claims by asking (for example)
whether the states were likely to prevail on their argument that the HEROES Act did not
authorize the cancellation policy.175 Instead, the district court held that none of the plaintiffs had
shown Article III standing under any of their injury theories.176
The Nebraska plaintiffs appealed the district court’s judgment to the U.S. Court of Appeals for
the Eighth Circuit (Eighth Circuit).177 They simultaneously asked the Eighth Circuit for two
related forms of relief. The Nebraska plaintiffs first asked for an administrative stay of the
cancellation policy to give the Eighth Circuit time to consider their second form of relief before

165 See Compl., Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. Sept. 29, 2022).
166 Id. ¶¶ 12–20.
167 Id. ¶¶ 142–48.
168 Id. ¶¶ 149–58.
169 Id. ¶¶ 159–71.
170 Id. ¶¶ 146–48, 155–56.
171 Id. ¶ 166.
172 Mot. for Prelim. Inj., Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. Sept. 29, 2022). A preliminary injunction is
a temporary court order, issued before final judgment, compelling or preventing an action to prevent an irreparable
injury to the party requesting the injunction. Injunction, BLACK’S LAW DICTIONARY (11th ed. 2019).
173 Pl. States Memo. in Supp. of Mots. for TRO and Prelim. Inj. at 3, Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo.
Sept. 29, 2022). ED subsequently stated that it would not discharge student loan debt under the policy until late
October 2022. See Decl. of James Richard Kvaal at ¶ 5, Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. Oct. 7,
2022). Before then, though, the U.S. Court of Appeals for the Eighth Circuit entered injunctive relief to stay the
policy’s implementation, relief that remains in effect as of the date of this publication. See infra notes 180–181 and
accompanying text.
174 Nebraska v. Biden, No. 4:22-cv-1040, 2022 WL 11728905, at *7 (E.D. Mo. Oct. 20, 2022).
175 See id. (dismissing complaint for lack of jurisdiction).
176 Id. at *4–7.
177 Not. of Appeal, Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. Oct. 20, 2022).
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ED began implementing the policy.178 The Nebraska plaintiffs also asked for an injunction of the
policy pending appeal.179
On October 21, 2022, the Eighth Circuit summarily granted the administrative stay.180 On
November 14, the court entered an injunction pending appeal.181 The Eighth Circuit explained
that at least one of the states, Missouri, had likely shown standing based on the policy’s effects on
MOHELA.182 The Eighth Circuit also found that the appeal involved “substantial,” unresolved
questions of law about ED’s statutory authority.183 The equities, the court reasoned, supported an
injunction, because allowing the policy to go into effect would have an “irreversible impact” on
the plaintiffs, while staying implementation would not harm eligible borrowers already covered
by the payment pause.184
Brown v. U.S. Department of Education
As Nebraska progressed, two student loan borrowers pressed a separate challenge to the
cancellation policy in a case captioned Myra Brown v. U.S. Department of Education, filed on
October 10, 2022, in the U.S. District Court for the Northern District of Texas.185 One of the
Brown plaintiffs is current on lender-held FFELP loans and thus is not eligible for cancellation.186
The only FFELP loans eligible for cancellation under the policy are those held by ED or in
default at a GA.187 The second plaintiff owes FDLP loans and thus is eligible for up to $10,000 in
cancellation.188 The second plaintiff would not receive an additional $10,000 in cancellation,
though, because he did not receive a Pell Grant.189
The Brown complaint includes a single APA count, which focuses on ED’s failure to follow
allegedly applicable procedures for developing the policy. In particular, the Brown plaintiffs say
that the cancellation policy qualifies as a “regulation” or “rule” as those terms are used in the
HEA and the APA, respectively.190 Because the policy allegedly fits these categories, the plaintiffs
contend they had a right to participate in the policy’s development, which ED did not allow
them.191 Like the Nebraska plaintiffs, the Brown plaintiffs filed a motion for preliminary
injunction alongside their complaint.192

178 See Dkt. Entry Granting Mot. for Administrative Stay, Nebraska v. Biden, No. 22-3179 (8th Cir. Oct. 21, 2022).
179 Emergency Mot. for Inj. Pending Appeal, Nebraska v. Biden, No. 22-3179 (8th Cir. Oct. 21, 2022).
180 Dkt. Entry Granting Mot. for Administrative Stay, Nebraska v. Biden, No. 22-3179 (8th Cir. Oct. 21, 2022).
181 See Nebraska v. Biden, 52 F.4th 1044 (8th Cir. 2022).
182 Id. at 1046–47.
183 Id. at 1047–48.
184 Id. at 1048. Four days before, on November 10, 2022, the Brown district court entered a judgment of vacatur setting
aside the cancellation policy. See infra note 198 and accompanying text.
185 Compl., Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-O (N.D. Tex. Oct. 10, 2022).
186 Id. ¶¶ 13–14.
187 See supra note 109 and accompanying text.
188 Compl. at ¶¶ 15–16, Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-O (N.D. Tex. Oct. 10, 2022).
189 Id. ¶ 16.
190 Id. ¶¶ 65–73.
191 Id. ¶ 72.
192 Pls.’ Mot. for Prelim. Inj., Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-O (N.D. Tex. Oct. 10, 2022).
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On November 10, the district court entered judgment for the Brown plaintiffs.193 The district court
held that the plaintiffs had standing based on a procedural injury theory.194 Turning to the merits,
the district court then considered the Brown plaintiffs’ single APA claim as relating to the APA’s
“procedural” and “substantive” requirements.195 As to procedure, the district court reasoned that
because ED issued the policy “under the HEROES Act, which exempts” the policy from public
comment requirements, the policy “did not violate the APA’s procedural requirements.”196 Then,
under the rubric of the APA’s “substantive requirements,” the district court held that the HEROES
Act did not in fact authorize the policy.197 As a remedy, the district court declared the policy
unlawful and ordered that it be vacated.198
The federal petitioners took an immediate appeal to the U.S. Court of Appeals for the Fifth
Circuit (Fifth Circuit)199 and asked the Fifth Circuit to stay the district court’s judgment pending
appeal.200 On November 30, the Fifth Circuit summarily denied that motion.201
Supreme Court Grants Certiorari Before Judgment
By mid-November 2022, orders issued by two courts—the Texas district court’s November 10
judgment of vacatur202 and the Eighth Circuit’s November 14 injunction203—barred ED from
implementing the cancellation policy. In November and December 2022, the federal petitioners
thus asked the Supreme Court for orders that would allow ED to move forward with the
cancellation policy while the appellate courts heard the appeals.204
In the alternative, the federal petitioners asked the Supreme Court to grant certiorari before
judgment.205 Federal statute empowers the Court to accept jurisdiction over a case “before
judgment has been rendered in the court of appeals.”206 This is not the typical route used to arrive
at the Court. The Court’s rules of practice say that certiorari before judgment is reserved for cases
of “such imperative public importance as to justify deviation from normal appellate practice.”207

193 See Brown v. U.S. Dep’t of Educ., No. 4:22-CV-0908-P, 2022 WL 16858525, at *15 (N.D. Tex. Nov. 10, 2022).
194 Id. at *7–9. The procedural injury theory is discussed in more detail. See infra “Procedural Injury.”
195 See Brown, 2022 WL 16858525 at *10–11.
196 Id. at *11.
197 Id. at *13–14.
198 Id. at *14–15.
199 Not. of Appeal, Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-P (N.D. Tex. Nov. 10, 2022).
200 Defs.-Appellants’ Emergency Mot. for Stay Pending Appeal, Brown v. U.S. Dep’t of Educ., No. 22-11115 (5th Cir.
Nov. 17, 2022).
201 Order, Brown v. U.S. Dep’t of Educ., No. 22-11115 (5th Cir. Nov. 30, 2022).
202 See supra note 198.
203 See supra note 181.
204 Appl. to Vacate the Inj. Entered by the U.S. Ct. of Appeals for the Eighth Cir., Biden v. Nebraska, No. 22A444
(U.S. Nov. 18, 2022); Appl. to Stay the J. Entered by the U.S. District Ct. for the N. District of Tex., U.S. Dep’t of
Educ. v. Brown, No. 22A489 (U.S. Dec. 2, 2022).
205 See, e.g., Appl. to Vacate the Inj. Entered by the U.S. Ct. of Appeals for the Eighth Cir. at 4, Biden v. Nebraska,
No. 22A444 (U.S. Nov. 18, 2022).
206 28 U.S.C. § 2101(e).
207 SUP. CT. R. 11.
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In December 2022, the Supreme Court deferred rulings on the federal petitioners’ applications for
relief from the restraining effects of the lower court orders.208 As a result, both orders continue to
bar ED from carrying out the cancellation policy.
The Supreme Court also granted certiorari in both cases and identified the questions it will
consider.209 In Nebraska, the Court will examine whether the state plaintiffs have Article III
standing, whether statute authorizes the cancellation policy, and whether the Secretary’s exercise
of any such authority was arbitrary or capricious.210 In Brown, the Court will consider the
borrower plaintiffs’ Article III standing and whether the policy is statutorily authorized and
adopted in a procedurally proper way.211
Do Plaintiffs Have Standing to Challenge the
Cancellation Policy?
Under Article III of the Constitution, the judicial power of the United States extends only to
“Cases” and “Controversies.”212 In particular, plaintiffs, whether individuals, businesses, or
governmental entities, must show that they have standing to sue before they may invoke the
jurisdiction of the federal courts.213 The Supreme Court has repeatedly held that to have standing,
a plaintiff must demonstrate that (1) they have suffered some injury-in-fact, (2) that the injury is
fairly traceable to the defendant’s allegedly unlawful conduct, and (3) that the injury is likely to
be redressed by the remedy sought from the court.214 As described by the Court in 2021, this
requirement ensures that federal courts only decide cases involving the “rights of individuals”
within the courts’ “proper function in a limited and separated government.”215
For an alleged harm to constitute an injury-in-fact, it must be both concrete (i.e., not abstract or
conjectural)216 and particularized (i.e., affecting the plaintiff individually).217 Common examples
of concrete harms include physical injuries or monetary losses,218 but concrete harms may also
include intangible injuries such as reputational harms or interference with a person’s

208 Dkt. Entry, Biden v. Nebraska, No. 22-506 (U.S. Dec. 1, 2022); Dkt. Entry, Dep’t of Educ. v. Brown, No. 22-535
(U.S. Dec. 12, 2022).
209 Dkt. Entry, Biden v. Nebraska, No. 22-506 (U.S. Dec. 1, 2022); Dkt. Entry, Dep’t of Educ. v. Brown, No. 22-535
(U.S. Dec. 12, 2022).
210 Dkt. Entry, Biden v. Nebraska, No. 22-506 (U.S. Dec. 1, 2022) (referencing the federal petitioners’ application to
identify questions presented in Nebraska); Appl. to Vacate the Inj. Entered by the U.S. Ct. of Appeals for the Eighth
Cir. at 38, Biden v. Nebraska, No. 22A444 (U.S. Nov. 18, 2022).
211 Dkt. Entry, Dep’t of Educ. v. Brown, No. 22-535 (U.S. Dec. 12, 2022) (stating questions presented).
212 U.S. CONST. art. III, § 2.
213 Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016) (explaining that Article III standing “doctrine limits the category
of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong”).
214 Hollingsworth v. Perry, 570 U.S. 693, 704 (2013).
215 TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2203 (2021) (internal quotation marks omitted) (distinguishing
between those cases that are properly within the judicial power and “hypothetical or abstract disputes” which are not).
216 See Carney v. Adams, 141 S. Ct. 493, 498 (2020) (“[A] grievance that amounts to nothing more than an abstract and
generalized harm to a citizen’s interest in the proper application of the law does not count as an injury in fact.” (internal
quotation marks omitted)).
217 Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 n.1 (1992).
218 Collins v. Yellen, 141 S. Ct. 1761, 1779 (2021) (stating that “pocketbook injury is a prototypical form of injury in
fact”).
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constitutional right of free speech.219 The harm must be “real and immediate” and not
hypothetical or imagined.220 With respect to particularity, the Court has explained that this inquiry
generally requires asking whether the plaintiff claims an injury that is personal, rather than a
grievance the plaintiff “suffers in some indefinite way in common with people generally.”221
Traceability generally requires a causal link between the defendant’s allegedly unlawful conduct
and the plaintiff’s injury.222 The Court has stated that it may be “substantially more difficult” to
establish causation where the asserted chain of events connecting unlawful action to harm
includes the actions of third parties who are not parties to the suit.223
Redressability requires a court to examine the particular relief requested by the plaintiff and ask
whether it likely would address the alleged injury.224 For example, a plaintiff lacks standing to
request an injunction to prevent future harm where they have failed to allege continuing or
threatened injury from an underlying violation of law.225
The Brown and Nebraska plaintiffs advance different standing theories, which fall into three
general categories. First, certain Nebraska plaintiffs allege that the cancellation policy causes
them financial harm based on its effects on loan servicers and lender-held FFELP loans. Second,
certain Nebraska plaintiffs assert harm in the form of lost state tax revenue. Third, the Brown
plaintiffs claim that the Secretary adopted the policy in disregard of alleged procedural rights to
participate in the policy’s development and that this procedural-right deprivation harmed their
interest in receiving cancellation benefits.
Financial Harm
The states of Missouri, Nebraska, and Arkansas argue that they have standing to pursue their
claim based on alleged financial harm.
Missouri’s financial-harm standing theories are unique for two reasons. First, only Missouri
claims to be injured because of the cancellation policy’s effects on direct loan servicers. Second,
Missouri’s claims of financial harm depend on an alleged injury suffered in the first instance by a
nonparty, MOHELA. Missouri thus offers two theories of how harm to MOHELA harms the
state. One theory alleges that financial harm to MOHELA results in direct, simultaneous harm to
Missouri because of the state’s degree of control over MOHELA. The second theory contends
that MOHELA’s financial losses will indirectly harm Missouri by impairing MOHELA’s ability
to make statutorily required payments to the state or scholarship contributions in lieu of such
payments.
Missouri, Nebraska, and Arkansas each claim a second type of financial harm. The states allege
that the policy gave borrowers of lender-held FFELP loans an incentive to consolidate into the
FDLP, which inflicted injury on these states in a variety of ways described below.

219 See Spokeo, Inc. v. Robins, 578 U.S. 330, 340 (2016) (“Although tangible injuries are perhaps easier to recognize,
we have confirmed in many of our previous cases that intangible injuries can nevertheless be concrete.”).
220 City of Los Angeles v. Lyons, 461 U.S. 95, 102 (1983) (internal quotation marks omitted).
221 DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 344 (2006).
222 Lujan, 504 U.S. at 560.
223 Warth v. Seldin, 422 U.S. 490, 505 (1975).
224 Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 103 (1998).
225 Lyons, 461 U.S. at 102–03.
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The following sections first examine the issues uniquely affecting Missouri’s standing before
turning to the second financial harm theory—the consolidation injury—asserted by the three
states.
Servicer Injury
Missouri’s unique theory of financial harm focuses on the cancellation policy’s alleged effects on
MOHELA in its capacity as one of ED’s loan servicers. ED contracts with third parties—loan
servicers—to perform many of the day-to-day administrative functions of the student loan
accounts that correspond to the tens of millions of student loans that ED holds.226 ED allocates
accounts to its servicers and then pays servicers based on the number and type of accounts and
the work that the servicer performs on ED’s behalf.227
MOHELA is one of ED’s loan servicers. In FY2022, ED paid MOHELA $88.9 million in direct-
loan servicer fees.228 These fees were the largest source of MOHELA’s revenue in that fiscal
year.229 Missouri thus argues that the cancellation policy will cause financial harm to MOHELA
because ED has stated that if all eligible borrowers applied for cancellation, up to 20 million
would have no remaining student loan balance after cancellation.230 The elimination of student
loan balances, Missouri says, means the closure of accounts—sometimes more than one per
affected borrower—that are assigned to ED’s servicers.231 These closures, in turn, would impact
servicer fees.232 If half of ED’s accounts close as a result of the policy, then Missouri argues that
MOHELA could lose “at least half of” the accounts allocated to it and “nearly 40 percent” of its
total operating revenue.233
In its briefs, the federal government appears to dispute that the policy will cause MOHELA to
lose servicer fees.234 It is unclear whether this position later changed at oral argument. On the one
hand, the Solicitor General said at oral argument that “if MOHELA made allegations that the”
policy “was going to have financial effects on it, it could sue in its own name and” the federal
petitioners “would not contest Article III standing.”235 On the other hand, the Solicitor General
reiterated arguments from the briefs that, as a factual matter, Missouri failed to demonstrate that
loan discharge under the policy would cause MOHELA to suffer a net revenue loss because ED
would compensate MOHELA for processing policy-related discharges. This new discharge-
processing revenue, according to the federal petitioners, could offset lost servicer revenue caused

226 See supra notes 58–60 and accompanying text.
227 See supra notes 61–62 and accompanying text.
228 See HIGHER EDUC. LOAN AUTH. OF THE STATE OF MO., FINANCIAL STATEMENTS 4 (2022). As of June 2022,
MOHELA had been allocated 5.2 million federal accounts for servicing. Id.
229 Id. at 4, 23.
230 See supra note 136 and accompanying text. As discussed above, though, ED does not anticipate that all eligible
borrowers will apply for cancellation. See supra note 164 (noting ED’s use of an 81-percent participation rate in its cost
estimates).
231 State Pls.’ Br., supra note 104, at 16.
232 State Pls.’ Br., supra note 104, at 16.
233 State Pls.’ Br., supra note 104, at 16.
234 Federal Pet’rs’ Br., supra note 104, at 28 (“The plan may not cause a significant drop in MOHELA’s revenue at
all.”).
235 Transcript of Oral Argument at 18:8–16, Nebraska v. Biden, No. 22-506 (Feb. 28, 2023),
https://www.supremecourt.gov/oral_arguments/argument_transcripts/2022/22-506_5426.pdf.
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by the policy, so that MOHELA potentially would not suffer a net revenue loss and thus no
financial harm.236
In the lower courts, the parties do not appear to have specifically focused on these potentially
offsetting servicer fees.237 As a result, it is unclear (for example) what rate ED would use to
compensate MOHELA for policy-related discharges.238 It is possible that the Supreme Court
could conclude, though, that one-time fees associated with discharging loans under the policy
likely would not offset the recurring fees that those same accounts would otherwise generate over
a longer term absent discharge.239
Direct Harm Theory
With respect to Missouri’s first theory of how harm to MOHELA harms the state, the parties offer
differing descriptions of the relationship between MOHELA and Missouri. Missouri argues that
MOHELA “is a Missouri-created and -controlled public instrumentality.”240 The federal
petitioners, by contrast, emphasize features of state law separating MOHELA from the state.241
Missouri argues that its description of the MOHELA-Missouri relationship fits within Supreme
Court cases that permitted a sovereign to litigate claims on behalf of its separately incorporated
public entity, while the federal petitioners seek to distinguish those cases.
There is support in Missouri state law for the parties’ differing views of the Missouri-MOHELA
relationship. On the one hand, MOHELA’s statutory charter describes the Missouri Authority as
an entity created for a public purpose that operates like a public entity with related privileges.
Missouri established MOHELA as a “public instrumentality” to pursue goals such as ensuring
that eligible students would have access to student loans.242 Missouri granted MOHELA statutory
authorities and stated that when it used these authorities, it would be performing “an essential
public function.”243 Likewise, the Missouri General Assembly declared MOHELA a “separate
public instrumentality of the state,” whose income and property are exempt from all state-law

236 See id. at 72:9–16 (“JUSTICE JACKSON: So we don’t know really what the ultimate loss would be to MOHELA,
even if we believe that MOHELA is part of the state [of Missouri]? GENERAL PRELOGAR: That’s right. The states
haven’t offered any evidence in that regard to substantiate their assertion of standing); see also id. at 71:23-72:8
(Solicitor General argument) (contending that MOHELA would receive “fees for discharging accounts” under the
policy that would have to be factored into a calculation of the net loss in servicer fees, if any, that MOHELA might
experience).
237 See, e.g., Defs. Memo. of Law in Oppo. to Plfs. Mot. for Prelim. Inj. at 15, Nebraska v. Biden, No. 4:22-cv-01040
(E.D. Mo. Oct. 7, 2022)) (arguing that Missouri’s servicer injury theory was impermissibly speculative because the
policy could either “reduce MOHELA’s portfolio” or “create increased demand for Direct Loans” and thereby increase
the “pool of debt available for MOHELA to service”).
238 A June 2020 contract states that ED pays MOHELA specified amounts for “discharge processing.” DEP’T OF EDUC.,
CONTRACT NO. 91003120D0002 WITH MOHELA 4 (June 23, 2020) (filed as Exh. C to Decl. of Michael E. Talent,
Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. filed Sept. 29, 2022)). However, this task relates to “discharge
categories authorized under the Higher Education Act.” Id. at 11 (emphasis added).
239 See supra note 233 and accompanying text (framing the possible extent of account closures).
240 State Pls.’ Br., supra note 104, at 16.
241 Federal Pet’rs’ Br., supra note 104, at 29 (“Missouri and MOHELA are legally separate entities. Missouri thus
cannot establish its own standing by asserting that the [policy] injures MOHELA.”).
242 MO. REV. STAT. § 173.360. To this end of improving access to student loans, the charter specifically authorized
MOHELA to originate FFELP loans. See id. § 173.387.
243 Id. § 173.360.
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taxation.244 MOHELA’s proceedings and actions “shall comply with all statutory requirements
respecting the conduct of public business by a public agency.”245
MOHELA is also accountable to Missouri state officials. It is led by a seven-member board.246
The governor appoints five members, by and with the advice and consent of the Missouri Senate,
while the two other members are Missouri state officials.247 The governor may remove any
authority member for cause.248 Statute also “assign[s]” MOHELA to the state’s Department of
Higher Education and Workforce Development (the Missouri Department).249 MOHELA must
report financial information to the Missouri Department annually.250 MOHELA must also receive
the Missouri Department’s approval before it may sell certain of its student loan notes.251
These features of MOHELA’s charter describe state control over the Missouri Authority’s
activities. However, other features of its charter describe structural and financial separation
between MOHELA and the state. MOHELA is a separate legal entity—that is, it is a “body politic
and corporate.”252 It has many powers of a corporation, including authority to “sue and be sued
and to prosecute and defend.”253 Missouri is not “liable in any event for the payment of the
principal of or interest on any bonds of the authority” or the performance of any MOHELA
agreement; MOHELA’s debt is not the debt of the state or any of its political subdivisions.254 Its
student loan notes are not “public property.”255 MOHELA and Missouri cannot rely on each
other’s assets to pay their separate expenses. That is, MOHELA cannot use its assets “for the
payment of debt incurred by the state,”256 and in turn MOHELA’s assets generally are not
“revenue of the state” or “subject to appropriation by” the General Assembly.257
These differing descriptions of the MOHELA-Missouri relationship are background for
arguments concerning Court precedent in two areas—original jurisdiction cases brought by states
and suits brought by the United States, both of which saw the sovereign government assert
interests that the opposing party argued belonged to one of the sovereign’s separately
incorporated public entities, capable of suing in its own name.258

244 Id. § 173.415.
245 Id. § 173.365.
246 Id. § 173.360.
247 Id. (stating that a member of the state’s coordinating board and its commissioner of higher education shall serve on
MOHELA’s board). The nine-member coordinating board heads the Missouri Department of Higher Education and
Workforce Development, and the commissioner of higher education (commissioner) acts as its chief administrative
officer. See, e.g., MO. CONST. art. IV, § 52; MO. REV. STAT. §§ 173.005 & 173.007. The governor appoints coordinating
board members, by and with the advice and consent of the Missouri Senate. MO. REV. STAT. § 173.005. The
coordinating board, in turn, appoints the commissioner. Id. § 173.007.
248 MO. REV. STAT. § 173.360.
249 Id. § 173.445.
250 Id.
251 Id. § 173.385.8.
252 Id. § 173.385.1.
253 Id. § 173.385.3.
254 Id. § 173.410.
255 Id. § 173.425.
256 Id. § 173.386.
257 Id. § 173.425; but see infra notes 293–298 and accompanying text (discussing the Lewis and Clark Discovery Fund
(LCD Fund)).
258 The Court has also concluded that when the government “creates a corporation by special law, for the furtherance of
governmental objectives, and retains for itself permanent authority to appoint a majority of the directors of that
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Original Jurisdiction Case Law: Possible Application of Arkansas v. Texas
The Constitution defines the Supreme Court’s original jurisdiction as including “cases” in “which
a state is a party,”259 meaning that, with the Supreme Court’s leave, a state can file its complaint
directly in the Court rather than in a district court.260 A state may invoke this original jurisdiction
only to pursue a “direct interest of its own” and not to “seek recovery” on behalf of others.261
Seventy years ago in Arkansas v. Texas, though, the Court declined to dismiss a suit brought by a
state for injuries suffered in the first instance by a state-created and -controlled entity that was not
itself a party to the litigation. Texas sought dismissal of Arkansas’s original-jurisdiction action
challenging Texas’s efforts in its own courts to enjoin a contract to finance a new hospital at the
University of Arkansas (the University).262 The contract named the University as a party to the
agreement but not the state of Arkansas as such.263
Texas claimed that the University’s injury was not also Arkansas’s injury.264 The Court
disagreed.265 State law established the University, the Court wrote, as “an official state
instrumentality” in a way that meant that “any injury under the contract to the University is an
injury to Arkansas.”266 Looking beyond state law’s description of the University, the Court also
held that “in substance the claim is that of the State,” which was the “real party in interest.”267
It is unclear how the framework set forth by the Court in Arkansas, used there to decide when
harm suffered by a separately incorporated state entity is shared by the state that created it, might
apply to MOHELA in the student loan cancellation litigation. The federal petitioners assert that
because Missouri created MOHELA as “a separate legal entity,” the state cannot maintain that it
and the state “are one and the same” for standing purposes.268 Yet Arkansas had also established
its University as a “body politic and corporate” with all the powers of a corporation.269 These
powers include, as the Arkansas Supreme Court explained in 1963, the power to sue and be

corporation,” the corporation may be subject to constitutional limitations such as the First Amendment. Lebron v. Nat’l
R.R. Passenger Corp., 513 U.S. 374, 399 (1995). Missouri argues that under this precedent, MOHELA is part of the
state despite those aspects of its charter that indicate separation. See id. at 391 (noting that Amtrak’s statutory charter
that it was not “an agency or establishment of the United States Government” (internal quotation marks omitted)).
Missouri’s argument concludes that because MOHELA is part of the state, and because the Missouri attorney general
has authority to protect state interests in litigation, the state can sue in MOHELA’s name. See State Pls.’ Br., supra note
104, at 17–18. The federal petitioners respond that Lebron and related cases address only whether MOHELA is a state
actor for purposes of the Constitution’s individual rights protections or the separation of powers; the Lebron line of
cases does not expressly address questions of standing. Reply Br. of Federal Petitioners, at 5 Biden v. Nebraska,
No. 22-506 (U.S. Feb. 15, 2023) [hereinafter Reply Br.].
259 U.S. CONST. ART. III, § 2.
260 SUP. CT. R. 11 (describing procedure in original actions).
261 See, e.g., State of Oklahoma ex rel. Johnson v. Cook, 304 U.S. 387, 396 (1938).
262 346 U.S. 368 (1953).
263 Id.
264 Id. at 369.
265 Id. at 370.
266 Id.
267 Id. at 371.
268 Federal Pet’rs’ Br., supra note 104, at 30.
269 State of Ark., 346 U.S. at 370 (internal quotation marks omitted).
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sued.270 MOHELA and the University otherwise had similar structural connections to the states
that created them.271
The ability to sue and be sued thus does not distinguish MOHELA from the University at issue in
Arkansas, but the two entities do differ in a potentially important respect. In Arkansas, the Court
noted that the state owned “all the property used by” the University, including the medical center
whose construction Texas was preventing.272 The Court also stated that Arkansas was the real
party in interest to the construction contract.273 These statements appear to focus on the benefit
that Arkansas derived from its suit. If Texas were compelled to allow construction, Arkansas
would then own new University property.274 If Missouri prevails in its suit, by contrast,
MOHELA would perhaps retain servicer fees it might otherwise lose with broad loan
cancellation, but those fees would not be directly accessible to Missouri under existing state
law.275
Federally Chartered Corporations Case Law: Possible Application of Cherry
Cotton Mills, Inc. v. United States
The Supreme Court has also considered whether the United States could litigate claims that
allegedly belonged to a federally chartered corporation that was absent from the suit and able to
bring the same claim on its own. Decided in 1946, Cherry Cotton Mills, Inc. v. United States
concerned two debts: a federal tax refund, and the taxpayer’s separate debt to the Reconstruction
Finance Corporation (RFC).276 The Department of the Treasury issued the taxpayer’s refund
check to the RFC to partially offset the RFC debt.277 The taxpayer claimed the offset was
improper, and sued the United States to recover the refund.278 The United States counterclaimed
to recover the RFC debt, arguing that the debt to the RFC was a claim “on the part of the
Government.”279
The RFC was not a party to the suit,280 and it had the power to sue on debts that were owed to
it.281 The taxpayer thus argued that the RFC’s debt should not be the basis for a government

270 See Cammack v. Chalmers, 284 Ark. 161, 163 (1984) (“The legislature designates the Board of Trustees of the
University as the corporate entity capable of being sued.”). The federal petitioners argue that the “university could not
sue or be sued in its own name” because the Arkansas Supreme Court had described the state’s district agricultural
schools as lacking those powers. Reply Br., supra note 258, at 5. However, the Arkansas statutes established state
district agricultural schools separately from the University, and those separate statutory authorities vested only the
University with “all the powers of a corporate body.” Ark. Code Ann. § 6-64-202.
271 For example, both were led by multimember boards appointed by state officials and described in state law as public
instrumentalities serving public purposes. Compare State of Ark., 346 U.S. at 370, with MO. REV. STAT. § 173.360.
272 State of Ark., 346 U.S. at 370.
273 Id. at 371.
274 Id. at 370.
275 See supra note 257 and accompanying text.
276 327 U.S. 536, 537 (1946).
277 Id. at 537–38.
278 Id. at 538.
279 Id. (internal quotation marks omitted).
280 See id.
281 Act of Jan. 22, 1932, Pub. L. No. 72-2, § 4, 47 Stat. 1, 2 (1932) (providing that the Reconstruction Finance
Corporation “shall have the power” “to sue and be sued, to complain and to defend, in any court of competent
jurisdiction, State or Federal”).
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counterclaim; just like a privately owned corporation, the RFC would have to pursue recovery of
its debt in separate litigation.282
The Supreme Court nonetheless allowed the counterclaim to proceed.283 The counterclaim statute,
the Court reasoned, “was intended to permit the Government to have adjudicated in one suit all
controversies between it and those granted permission to sue it.”284 This intended purpose
encompassed the RFC’s claims. Though Congress had referred to the RFC as a corporation, in
actuality it was “an agency selected by Government to accomplish purely Governmental
purposes” because of the United States’ pervasive control over the RFC.285
The Court offered specific examples of this pervasive control, and the parties dispute whether
these examples are sufficiently similar to Missouri’s relationship with MOHELA. The Court in
Cherry Cotton Mills noted that the President appointed all of the RFC’s directors and that the
RFC was tasked with accomplishing a public purpose.286 Missouri argues that the same is true of
the relationship between it and MOHELA.287 The Court also noted that the United States was
financially tied to the RFC: all of the RFC’s money “came from” the United States, and the
United States both received all of the RFC’s profits and bore all of its losses.288 The federal
petitioners stress that the same is not true of Missouri’s ties to MOHELA.289
Cherry Cotton Mills is also not a perfect fit for Missouri’s standing theory. Except for
MOHELA’s obligation to make Lewis and Clark Discovery Fund (LCD Fund) distributions, no
direct financial connection exists between the state and MOHELA.290 Missouri would not suffer
the same type of direct pocketbook injury on account of servicer injury that the United States
would suffer from having RFC debts go uncollected.291 To say that a case is not a perfect fit for a
theory does not mean that the case provides no support, and Missouri’s nonfinancial connections
to MOHELA resemble those present in Cherry Cotton Mills. The question confronting the Court,
then, is which of these connections—financial connections, other forms of control, or both—is
most legally salient for deciding whether a sovereign may assert the rights of a separately
incorporated entity with its own power to vindicate those interests.
Indirect Harm Theory
Missouri’s direct-harm theory posits that MOHELA’s injuries are also injuries of the state. The
state’s indirect-harm theory contends that the cancellation policy will financially harm MOHELA
and thereby affect its ability to make two types of related payments to the state.292

282 See Cherry Cotton Mills, Inc., 327 U.S. at 538.
283 Id. at 539.
284 Id.
285 Id.
286 Id.
287 State Pls.’ Br., supra note 104, at 18.
288 Cherry Cotton Mills, Inc., 327 U.S. at 539.
289 Reply Br., supra note 258, at 6.
290 See supra notes 254–257 and accompanying text.
291 See, e.g., MO. REV. STAT. § 173.410 (“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.”).
292 State Pls.’ Br., supra note 104, at 21 (“By hindering MOHELA’s contributions to the State, the Program risks
financial injury to Missouri.”).
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Missouri refers to the first type of payments as “distributions.”293 MOHELA must make
distributions worth $350 million to Missouri’s LCD Fund.294 When the LCD Fund has a balance,
the Missouri General Assembly is able to appropriate from the Fund to support capital projects at
the state’s public colleges and universities and the Missouri Technology Corporation’s work with
colleges and universities.295
MOHELA states that as of June 30, 2022, it still owed the LCD Fund $105.1 million and last
made a distribution in 2008.296 When further distributions will occur is unclear. State law allows
MOHELA to ask the state for an extension of the due date.297 In FY2017, MOHELA received an
extension to September 30, 2024, “with one year extensions for each additional $5 million” of
educational-assistance contributions.298
MOHELA’s payments to state educational funds that assist Missouri students are the second type
of payments that Missouri says will be indirectly impacted by the cancellation policy. MOHELA
contributes to Missouri Department of Higher Education and Workforce Development
programs.299 These contributions include $65 million paid to the state’s Access Missouri
Financial Assistance Program.300 MOHELA made these payments to the Access Missouri
program in fiscal years 2011, 2012, and 2013 in exchange for the state granting extensions of
prior LCD Fund distribution due dates.301
The federal petitioners argue that Missouri’s indirect-harm theory faces two problems, one that is
mainly legal and other mainly factual. On the legal front, the federal government argues that the
rights Missouri attempts to assert are not its own.302 That is, the federal government argues that
Missouri looks to sue for injuries suffered as a legal matter by MOHELA. The federal petitioners
argue that the state’s attempt to rely on these injuries is no different from an ordinary creditor
trying to base its standing on injury to its debtor, which the Court’s case law does not allow.303

293 See MO. REV. STAT. § 173.385.2.
294 Id.
295 Id. § 173.392.2; see also id. § 348.251.2 (authorizing the Missouri governor to establish “a private not-for-profit
corporation named the ‘Missouri Technology Corporation,’ to carry out the provisions” of the Revised Statutes).
296 HIGHER EDUC. LOAN AUTH. OF THE STATE OF MO., FINANCIAL STATEMENTS 20–21 (2022).
297 MO. REV. STAT § 173.385.2 (“Notwithstanding the ability of the authority to delay any distribution required by this
subsection” if the lack of delay would have certain adverse effects on MOHELA, “the distribution of the entire three
hundred fifty million dollars of assets by the authority to the Lewis and Clark discovery fund shall be completed no
later than September 30, 2013, unless otherwise approved by the authority and the commissioner of the office of
administration.” (emphasis added)).
298 HIGHER EDUC. LOAN AUTH. OF THE STATE OF MO., FINANCIAL STATEMENTS 21 (2022).
299 Id. at 10 (listing MOHELA’s annual contributions to scholarship funds including those administered by Missouri
such as the A+ Scholarship Program); see also MO. REV. STAT. § 160.545.
300 See, e.g., MO. REV. STAT. § 173.1104 (describing eligibility rules for the Access Missouri Financial Assistance
Program (Access Missouri)).
301 HIGHER EDUC. LOAN AUTH. OF THE STATE OF MO., FINANCIAL STATEMENTS 9 (2022). MOHELA continues
contributing to Department of Higher Education and Workforce Development programs, but it is unclear whether
future extensions of the distribution due date are contingent on such contributions. MOHELA’s financial statements
describe an agreement with the state for “one year extensions” beyond FY24 “for each additional $5 million” in
payments MOHELA makes to a different recipient program, the Missouri Scholarship and Loan Foundation (the
Foundation). MOHELA created the Foundation as a nonprofit to assist Missouri residents attending Missouri
postsecondary institutions. Id. at 9–10, 29.
302 Federal Pet’rs’ Br., supra note 104, at 27.
303 Federal Pet’rs’ Br., supra note 104, at 27 (stating that this standing theory equates to “the proposition that, if A
causes financial harm to B, and B owes money to C, C has standing to sue A”).
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To distinguish its standing theory from the ordinary debtor example, Missouri relies on the
Court’s 1990 decision in Franchise Tax Board of California v. Alcan Aluminum Ltd.304 There, the
Court found that two corporations had Article III standing to challenge California taxes on their
respective wholly owned subsidiaries.305 The allegedly illegal taxes threatened to lower the value
of their holdings in the subsidiaries.306 Missouri thus likens MOHELA to a wholly owned
subsidiary, citing its control over MOHELA and the distributions that the Missouri Authority
must make to the state.307 Whether the Court accepts Missouri’s analogy to Aluminum Ltd.
appears to depend on how closely it views the statutory relationship between Missouri and
MOHELA.308
On the factual front, the federal government argues that Missouri can only speculate that the
policy’s effects on MOHELA will cause it to default on payments to the LCD Fund.309 The Court
has said that to show standing, “possible future injury” is not enough.310 Injury must be “certainly
impending.”311 The Court has also usually been reluctant “to endorse standing theories that rest
on speculation about the decisions of independent actors.”312 Whether the Court views Missouri’s
predictions of the cancellation policy’s effects as certainly impending harm or mere speculation
will likely depend on its view of the extent of the harms that MOHELA may suffer, such as server
injury, because of the policy.313 The larger that harm, the more likely that the policy will affect
MOHELA’s ability to make required distributions or contributions to educational assistance
programs for distribution extensions.
Consolidation Injury
Missouri, Nebraska, and Arkansas claim a second type of financial harm, the cancellation policy’s
alleged effects on lender-held FFELP loans. Since unveiling the policy, ED has maintained that

304 493 U.S. 331 (1990). Missouri also relies on Hunt v. Washington State Apple Advertising Commission, in which the
Court stated that the interests of the Washington State Apple Advertising Commission (the Commission) “may” have
been impacted by a North Carolina statute that barred the sale of apples labeled as “Washington Apples,” even though
Commission did not itself participate in the “Washington Apples” market. 432 U.S. 333, 341, 345 (1977). The
Commission received annual assessments from Washington producers based on the sales volume of that market. Id. at
345. If the label requirement impacted sales of Washington Apples, “it could reduce the amount of the assessments due
the Commission and used to support its activities.” Id. Despite these comments, the Court appears to have based its
finding of Article III standing on a separate theory of representational standing. Under that theory, the Commission was
able to sue on behalf of Washington Apple producers in the same manner as a trade association representing the
interests of its members. See id. (“We . . . agree with the District Court that the Commission has standing to bring this
action in a representational capacity.”).
305 Alcan Aluminum Ltd., 493 U.S. at 335–36.
306 Id.
307 State Pls.’ Br., supra note 104, at 21 (“By hindering MOHELA’s contributions to the State, the Program risks
financial injury to Missouri.”).
308 See Alcan Aluminum Ltd, 493 U.S. at 335–36 (agreeing with the appellate court’s holding that standing existed
because the parent corporation’s ownership interest in the subsidiaries gave the parents a “personal stake” in the
litigation that ensured the parties would be adverse to one another and “sharply” present issues for determination by
federal courts).
309 Federal Pet’rs’ Br., supra note 104, at 28.
310 Whitmore v. Arkansas, 495 U.S. 149, 158 (1990).
311 Id.
312 Clapper v. Amnesty Int’l USA, 568 U.S. 398, 414 (2013).
313 See supra “Servicer Injury” and infra “Consolidation Injury” (describing the types of financial harms that
MOHELA alleges).
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lender-held FFELP loans would not themselves be eligible for cancellation.314 ED has also
maintained that certain Direct Consolidation Loans would be eligible for cancellation.315 ED has
said that so long as a Direct Consolidation Loan consolidated loans that were disbursed before
June 30, 2022, it would be a loan type eligible for cancellation.316 At first, ED set no deadline by
which a borrower would need to apply for consolidation.317 All lender-held FFELP loans capable
of being consolidated into the FDLP would have met the June 30 criterion because FFELP loans
disbursed no later than June 2010.318 Thus, borrowers of lender-held FFELP loans could initially
access cancellation by obtaining a Direct Consolidation Loan.
The states argue that because the borrower of a lender-held FFELP loan could access cancellation
through consolidation into the FDLP, the cancellation policy as originally announced created an
incentive to consolidate into the FDLP.319 ED pays the remaining balance of a lender-held FFELP
loan using a Direct Consolidation Loan’s proceeds.320 This form of loan prepayment, the states
argue, injured them.321
How those consolidation injuries allegedly manifest themselves varies by state. Missouri claims
injury from the fact that MOHELA holds FFELP loans.322 Along with receiving interest income
from the loans, MOHELA uses the loans as security for the SLABS that it issues.323 The
consolidation of MOHELA-held FFELP loans eliminates their future interest income and also
allegedly undermines the value of associated MOHELA-issued SLABS by reducing future yield
to investors.324 The Arkansas Student Loan Authority (ASLA) also holds FFELP loans.325 ASLA
receives an administrative fee based on the amount of its total outstanding FFELP balances.326 It
estimates that $5 million-$6 million of its $100 million FFELP loan portfolio was consolidated
into the FDLP between August 24 and September 29, 2022.327 Additionally, the Nebraska
Investment Council invests in SLABS payable from lender-held FFELP loans.328 As with
Missouri’s claim of injury, Nebraska argues that consolidation reduces the value of its SLABS
holdings.329
Standing theories that rest on alleged consolidation injuries raise two primary questions. First, the
states’ incentive-to-consolidate theory depends on an FFELP borrower deciding to prepay their
loans through a Direct Consolidation Loan to gain cancellation eligibility. The federal petitioners

314 See supra note 109 and accompanying text.
315 See supra note 110 and accompanying text.
316 See supra note 110 and accompanying text.
317 See supra note 116 and accompanying text.
318 See supra note 27 and accompanying text.
319 State Pls.’ Br., supra note 104, at 27–28.
320 See supra note 55 and accompanying text.
321 State Pls.’ Br., supra note 104, at 26–27.
322 See HIGHER EDUC. LOAN AUTH. OF THE STATE OF MO., FINANCIAL STATEMENTS 51 (2022).
323 See, e.g., supra note 46 and accompanying text.
324 See supra note 49 (MOHELA SLABS Offering Memorandum explaining that “rates of payment of principal on the
Notes and the yield on the Notes may be affected by prepayments of the Financed Eligible Loans”).
325 See Decl. of Tony Williams at ¶¶ 5–6, Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. Sept. 29, 2022).
326 Id. at ¶ 6.
327 Id. at ¶ 7.
328 Decl. of Michael Walden-Newman at ¶¶ 4–7, Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. filed Sept. 29,
2022).
329 State Pls.’ Br., supra note 104, at 27.
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argue, though, that the states can only speculate that a particular consolidation related to the
policy and not to other factors.330 A plaintiff might lack Article III standing if the “independent”
action of a third party breaks the causal chain between the defendant’s conduct and the plaintiff’s
injury.331 In that event, judicial relief will not “remove” harm that results from the actions of a
third party who is not before the court.332 However, if the defendant’s conduct has a
“determinative” or “coercive” effect on the third party’s action, the Court’s cases do not consider
the third party’s decision to be “independent” of the defendant’s.333
There is no record evidence of why particular borrowers made consolidation decisions. Rather,
for proof of the incentive to consolidate, plaintiffs rely on ASLA’s experience with consolidation
between August 24 and September 29, 2022, as well as the amount of cancellation benefits
available, up to $20,000. Whether this evidence is enough to show the policy’s determinative
effects on consolidation decisions is unclear, but the Court might place the most weight on the
amount of cancellation benefits available after consolidation.334 Perhaps, as the government
argues, there are costs to consolidation that affect a borrower’s calculus.335 For those FFELP
borrowers who were aware of the policy and chose consolidation, however, the prospect of
cancellation of debt, tax free under federal law,336 is likely to have weighed heavily in their
decisions.
The second question raised by the states’ asserted consolidation injuries is the effect of ED’s
September 2022 consolidation limit on the states’ consolidation injury theory. The parties appear
to alternatively cast the limit as bearing on two separate but related issues. The federal petitioners
claim that the consolidation limit defeats efforts to demonstrate an injury for standing purposes.
The state plaintiffs claim that the limit raises only questions of mootness, but that the federal
petitioners have failed to carry their burden of showing mootness.
The federal petitioners argue that the consolidation limit is not a change to the cancellation policy.
According to the petitioners, earlier statements concerning the policy that did not include the
consolidation limit reflected the Secretary’s intentions concerning the policy at that time, before
the policy had been finalized with publication of ED’s modifications in the Federal Register in
October 2022.337 Even before the Nebraska plaintiffs filed suit on September 29, the Secretary
had decided to adopt the consolidation limit, and the limit was part of the policy as finalized.338 In
the federal government’s telling, then, during the time period relevant to the Nebraska plaintiffs’
suit and its request for prospective injunctive relief, there was no incentive to consolidate, and
thus no injury on account of incentivized consolidation.339

330 Federal Pet’rs’ Br., supra note 104, at 26.
331 Bennett v. Spear, 520 U.S. 154, 169 (1997) (internal quotation marks omitted).
332 Warth v. Seldin, 422 U.S. 490, 505 (1975).
333 Spear, 520 U.S. at 169.
334 The state plaintiffs do not offer evidence of how frequently borrowers of ASLA-held FFELP loans consolidated into
the FDLP before the policy was announced, so it is unclear how the $5-6 million volume compares to time periods
before the policy was announced.
335 Federal Pet’rs’ Br., supra note 104, at 26 (arguing that the costs of consolidation include “a longer repayment period
and the loss of discounts associated with the existing loans”).
336 See 26 U.S.C. § 108(f)(5).
337 See Reply Br., supra note 258, at 10.
338 See Reply Br., supra note 258, at 10–11.
339 See Reply Br., supra note 258, at 10–11.
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The state plaintiffs, by contrast, contend that the September 2022 consolidation limit goes not to
standing but to mootness. Mootness concerns whether a circumstance that occurred after the
filing of the complaint deprived the plaintiff of a personal stake that it once had in the outcome of
the litigation.340 The states argue that the consolidation limit relates to mootness because although
ED publicly announced the limit the same day that the Nebraska plaintiffs filed suit, the
announcement did not occur until hours after the complaint’s filing.341
As the Supreme Court has explained, the distinction between standing and mootness matters
because the law assigns burdens differently based on the doctrine that is at issue.342 The party
invoking a federal court’s jurisdiction—here, the states—must demonstrate standing.343 The
federal petitioners, though, bear “the burden to establish that a once-live case has become
moot.”344 When the government claims that a case is moot because it has voluntarily ceased
allegedly unlawful conduct, its burden of showing mootness is “heavy.”345 Voluntary cession
“does not moot a case unless it is absolutely clear that the allegedly wrongful behavior could not
reasonably be expected to recur.”346
In one respect, the consolidation limit resembles an effort at voluntary cessation where the
alleged injurious conduct might recur because ED has expressed an interest in extending relief to
lender-held FFELP loans in the future. Alongside the limit, ED explained that it was “assessing
whether there are alternative pathways to provide relief to borrowers with federal student loans
not held by ED,” arguably suggesting a willingness on ED’s part to resume conduct that, in the
states’ view, would encourage consolidation and alleged, attendant financial harm.347 Moreover,
press reports published before the Nebraska plaintiffs filed suit raised the prospect of claims
apparently predicated on consolidation injuries.348
In another respect, though, the limit might not implicate some concerns that underlie the Supreme
Court’s voluntary cessation case law, such as attempts to insulate agency action from ongoing
judicial review. Even though the consolidation limit was not publicly announced until after the
Nebraska plaintiffs filed suit, ED instructed its vendor to carry out that announcement the day
before the plaintiffs filed suit,349 and it included the limit in the “finalized” policy.350 At that time,

340 See, e.g., Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 72 (2013).
341 State Pls.’ Br., supra note 104, at 28 (“The day the States sued but after the complaint was filed, the Department
updated its website to say that borrowers with privately held FFEL Loans could no longer become eligible for the
Program through consolidation.” (emphasis added)).
342 W. Virginia v. Env’t Prot. Agency, 142 S. Ct. 2587, 2607 (2022).
343 Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992).
344 W. Virginia, 142 S. Ct. at 2607.
345 Id.
346 Id. (internal quotation marks omitted).
347 See supra note 119 and accompanying text.
348 See, e.g., Ayelet Sheffey, The CEO of a Major Student-Loan Company Says He Won’t Sue Biden on Debt
Cancellation Even Though He ‘Clearly’ Has Standing, BUS. INSIDER (Sept. 16, 2022),
https://www.businessinsider.com/navient-ceo-wont-sue-biden-student-loan-debt-forgiveness-standing-2022-9 (last
visited Apr. 14, 2023) (quoting Navient Chief Executive Officer that the company “would clearly have standing as a
holder of FFELP loans, but it’s not clear whether or not some political entity that might have standing in their state
because of a state agency that owns FFELP loans will or will not decide to sue”).
349 See supra note 117 and accompanying text.
350 See Federal Student Aid Programs (Federal Perkins Loan Program, Federal Family Education Loan Program, and
William D. Ford Federal Direct Loan Program), 87 Fed. Reg. 61512, 61514 (Oct. 12, 2022).
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there was no pending lawsuit that invoked a theory of consolidation injury.351 ED also does not
appear to have taken further action of establishing alternative pathways for relief for borrowers of
lender-held FFELP loans.
Procedural Injury
While the Nebraska plaintiffs advance several standing theories whose particulars sometimes
vary state to state, the Brown plaintiffs advance a single standing theory alleging that both
borrower plaintiffs suffered the same type of injury and that an order vacating the policy will
remedy this injury for both plaintiffs. In particular, the Brown plaintiffs seek to establish standing
to challenge the cancellation policy based on a procedural injury theory.
In a procedural injury case, a plaintiff claims that Congress gave him a “procedural right to
protect his concrete interests.”352 The plaintiff suffers an “injury” for Article III standing purposes
when an agency denies the plaintiff the procedural right in a way that harms a concrete interest.353
As with standing more generally, a plaintiff alleging a procedural injury must show that the relief
he seeks will redress the harm suffered. The Court, however, has stated that in some respects
procedural injury theories are “special.”354 That is because “normal standards for redressability”
do not apply.355 All that the plaintiff must show is that there is “some possibility” that requiring
the agency to honor the procedural right will cause it to reconsider the action that is harmful to
the plaintiffs’ concrete interest.356
The procedural-injury framework first requires a plaintiff to identify a procedural right. The
Brown plaintiffs assert a right to participate in the development of rules and regulations pertaining
to Title IV programs conferred by the HEA and the APA.
First, the Brown plaintiffs argue that the cancellation policy should have been the subject of
negotiated rulemaking under the HEA because it is a “regulation” that “pertain[s]” to Title IV.357
Under this process, the Secretary must obtain “advice and recommendations” from those involved
in Title IV programs, including “students.”358 He then submits “draft regulations” to negotiated
rulemaking.359 The Secretary selects participants in negotiated rulemaking from individuals
nominated by stakeholder groups.360 If the participants in negotiated rulemaking agree on the
regulation, the Secretary’s published proposed regulation must presumptively conform to the

351 While the Court is considering appeals in only Nebraska and Brown, other plaintiffs have filed lawsuits challenging
the cancellation policy on various grounds, some of which are still pending in lower courts. To date Nebraska is the
only suit to feature a consolidation injury standing theory.
352 Massachusetts v. E.P.A., 549 U.S. 497, 517 (2007) (internal quotation marks omitted).
353 See Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009) (explaining that “deprivation of a procedural right
without some concrete interest that is affected by the deprivation—a procedural right [in a vacuum]—is insufficient to
create Article III standing”).
354 Lujan v. Defs. of Wildlife, 504 U.S. 555, 572 n.7 (1992).
355 Id.
356 Massachusetts, 549 U.S. at 517–18.
357 Br. of Resp’ts’ at 26, Dep’t of Educ. v. Brown, No. 22-535 (U.S. Jan. 27, 2023) [hereinafter Borrower Pls.’ Br.]; see
also 20 U.S.C. § 1098a(b)(2) (describing the actions to which negotiated rulemaking applies).
358 20 U.S.C. § 1098a(a)(1), (b)(1).
359 Id. § 1098a(b)(1). However, the Secretary may exempt certain regulations from negotiated rulemaking if he
determines that process would be impracticable, unnecessary, or contrary to the public interest. See id. § 1098a(b)(2).
360 Id. § 1098a(b)(1).
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agreement.361 The Secretary may, however, reopen negotiated rulemaking or depart from the
agreements reached if he provides a written explanation of his decision.362
Second, the Brown plaintiffs argue that the policy is a “rule” under the APA.363 The Brown
plaintiffs argue that, under the APA’s notice-and-comment rulemaking provisions, the Secretary
should have published notice of the proposed rule, given “interested persons an opportunity to
participate in the rule making,” and considered the views presented before finalizing the rule.364
The procedural-injury framework next requires a plaintiff to identify a concrete interest
threatened by denial of the procedural right. The Brown plaintiffs describe this interest as
“‘pocketbook injury’”: a desire to have their student loan debts canceled.365 Plaintiff Myra Brown
would not receive any cancellation because she is the borrower on current, lender-held FFELP
loans, a loan type not eligible for cancellation under the policy.366 Plaintiff Alexander Taylor
would receive up to $10,000 in cancellation. However, though he earns less than $25,000 a year,
he would not receive an additional $10,000 in cancellation because he was not a Pell Grant
recipient.367
As noted above, the Brown plaintiffs must show that there is “some possibility” that if the policy
is vacated and ED is required to follow HEA and APA procedural requirements, it will reconsider
those aspects of the policy that deny cancellation benefits and adopt a new policy.368 As proof of
this possibility, the Brown plaintiffs state that during the 2020 presidential election, then-
candidate Biden stated he would “forgive all undergraduate tuition-related federal student debt
from two- and four-year public colleges and universities for debtholders earning up to
$125,000.”369 The Brown plaintiffs appear to argue that this and other statements are evidence of a
willingness to adopt a more generous cancellation policy that would grant them cancellation
benefits (in plaintiff Brown’s case) or greater benefits (in plaintiff Taylor’s case).370
ED argues that the Brown plaintiffs have not shown that an order vacating the policy would
redress the concrete harms they allege: the denial of cancellation benefits. The plaintiffs contend
the HEROES Act’s exceptions from HEA and APA procedural requirements do not apply to the
policy because the Secretary lacks substantive authority under the Act to cancel loans.371 Under

361 Id. § 1098a(b)(2).
362 Id.
363 Borrower Pls.’ Br., supra note 357, at 26.
364 5 U.S.C. § 553(c).
365 Borrower Pls.’ Br., supra note 357, at 26 (quoting Collins v. Yellen, 141 S. Ct. 1761, 1779 (2021)).
366 Decl. of Myra Brown at ¶¶ 2, 4–5, Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-O (N.D. Tex. filed Oct. 10,
2022).
367 Decl. of Alexander Taylor at ¶¶ 2–3, 5, 7, Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-O (N.D. Tex. filed Oct.
10, 2022).
368 Massachusetts v. E.P.A., 549 U.S. 497, 517–18 (2007).
369 See, e.g., Borrower Pls.’ Br., supra note 357, at 10, 29 (internal quotation marks omitted).
370 The Brown plaintiffs would not benefit from then-candidate Biden’s campaign statement because the cancellation it
described would not have applied to loans borrowed to attend private universities. See Decl. of Myra Brown at ¶¶ 2, 4,
Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-O (N.D. Tex. filed Oct. 10, 2022) (stating that she obtained FFELP
loans to pay for graduate school at Southern Methodist University); Decl. of Alexander Taylor at ¶ 2, Brown v. U.S.
Dep’t of Educ., No. 4:22-cv-00908-O (N.D. Tex. filed Oct. 10, 2022) (stating that he obtained FDLP loans to attend the
University of Dallas). The Brown plaintiffs appear to cite the statement as proof, generally, of a willingness on the
Administration’s part to adopt a different version of cancellation benefits.
371 Federal Pet’rs’ Br., supra note 104, at 32.
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that theory, the federal petitioners say that “the Secretary would lack authority to provide loan
forgiveness to any borrower—Brown and Taylor included.”372
It is unclear how the Supreme Court might analyze redressability. Plaintiffs argue that it is
“myopic” to focus only on the HEROES Act when considering whether ED would have authority
to provide more generous cancellation benefits.373 The plaintiffs say that the federal petitioners
“boast[]” in their brief that the HEA itself—not just the HEROES ACT—“allows for substantial
debt forgiveness.”374
In particular, Section 432(a)(6) of the HEA states that the Secretary may “enforce, pay,
compromise, waive, or release any right, title, claim, lien, or demand, however acquired,
including any equity or any right of redemption.”375 In other litigation, ED has said that it used
Section 432’s compromise-and-waive language to provide student loan discharges for at least
seven groups of borrowers.376 These discharge groups, announced between 2019 and 2022, range
in size from 7 to 560,000 borrowers.377 The aggregate, estimated loan discharge amounts across
the groups is more than $11.6 billion.378 ED says it used Section 432 as authority for an eighth
proposed group discharge, a class settlement in Sweet v. Cardona. In November 2022, a district
court granted final approval of the Sweet settlement.379 As to that eighth group, ED estimates that
the settlement will yield at least $7.5 billion in loan discharges.380
Measured in terms of the estimated loan amounts that it will discharge, the cancellation policy is
more than twenty-two times as large ($430 billion, using CBO’s estimate of the face amount of
loans that might be canceled under the policy381) as all alleged prior uses of Section 432 authority
(about $19.1 billion).382 Moreover, only one district court appears to have agreed that Section 432
authorizes group-based discharge, addressing a circumstance that the district court said entailed
forgiveness of “over six billion dollars in loans.”383 If Section 432 were used to replace the
HEROES Act for cancellation on a much larger scale, that shift in legal rationale could raise
questions of statutory authority like those raised by use of the HEROES Act.
One question, then, for the Brown plaintiffs is whether the Supreme Court would factor into its
redressability analysis whether an alternative source of statutory authority exists to provide such
cancellation. If the Court concludes that the parties have not identified an alternative source of

372 Federal Pet’rs’ Br., supra note 104, at 32.
373 Borrower Pls.’ Br., supra note 357, at 30.
374 Borrower Pls.’ Br., supra note 357, at 30.
375 20 U.S.C. § 1082(a)(6).
376 See Joint Resp. to Nov. 4, 2022 Order at 2, Sweet v. Cardona, No. 3:19-cv-03674-WHA (N.D. Cal. Nov. 9, 2022).
In their opening brief the federal petitioners likewise refer to some of these same group discharges as having been
accomplished under Section 432. See Federal Pet’rs’ Br., supra note 104, at 4 n.1.
377 See Joint Resp. to Nov. 4, 2022 Order at 2, Sweet v. Cardona, No. 3:19-cv-03674-WHA (N.D. Cal. Nov. 9, 2022).
378 See id.
379 Order Granting Final Settlement Approval at 25, Sweet v. Cardona, 3:19-cv-03674-WHA (N.D. Cal. Nov. 16,
2022).
380 Id. at 5. If implemented the settlement could result in the discharge of additional amounts for another group of
borrowers, “Post-Class Applicants,” whose loans do not figure in the $7.5 billion estimate. See id. at 5–6.
381 See supra note 163.
382 See supra notes 377–380 and accompanying text.
383 See Order Granting Final Settlement Approval at 5, 8, Sweet v. Cardona, 3:19-cv-03674-WHA (N.D. Cal. Nov. 16,
2022) (“Upon a plain reading,” Section 432(a)(6) “bestows the Secretary with broad discretion over handling—and
discharging—student loans.”).
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statutory authority, it might conclude that the Brown plaintiffs’ injuries are not redressable for the
reasons the federal petitioners advance. Alternatively, the Court might reason that it would not
need to consider whether an alternative source of statutory authority exists unless some other
party with standing to do so challenges the reconsidered policy in a future case. No Supreme
Court case cited by the parties appears to directly answer these redressability questions.
Tax Revenue Injury
A theory of standing asserted by several of the state plaintiffs in Nebraska arises from the
treatment of discharges of student loan debt for purposes of federal income taxes. Under the
Internal Revenue Code (IRC), discharges of debt are generally included as gross income for
purposes of an individual’s federal income taxes unless excluded under IRC Section 108.384
Historically, Section 108 excluded from gross income student loan discharges that were
contingent upon the borrower working in a certain profession for a period of time or granted on
account of the borrower’s death or permanent disability.385
However, in 2021, ARPA temporarily expanded the categories of discharged student loans that
could be excluded from gross income.386 Specifically, Section 108 now excludes any discharges
of most student loans that occur between 2021 and 2025.387 As a result of the ARPA amendments,
individuals who receive some debt relief under the cancellation policy would not appear to incur
additional federal tax liability for that cancellation.
Like the IRC, many states with income taxes also include discharges of debt as income. Several
of the plaintiff states similarly exclude discharges of loans that would be excluded for federal
income tax purposes under Section 108, including the temporarily expanded exclusion of student
loan discharges for tax years 2021 through 2025.388 These states argue that the cancellation policy
will consequently result in lost state tax revenue.389 They argue that by canceling debt now, the
cancellation policy will reduce the amount of loan discharges that would otherwise have occurred
after January 1, 2026 (and would therefore be taxable under federal law and, consequently, also
under state law).390 The U.S. District Court for the Eastern District of Missouri rejected this
argument, holding that claims of future lost tax revenues were merely speculative and that the
states were not prohibited from enacting changes to their tax codes to avoid the anticipated loss in
revenue.391
The question of whether the loss of tax revenue resulting from another jurisdiction’s actions is a
cognizable harm for Article III purposes may be informed by three decisions of the Supreme
Court. First, Florida v. Mellon, decided in 1927, involved a challenge to a federal inheritance tax,
which provided a credit for similar state inheritance taxes paid on an estate.392 Because Florida
did not have an inheritance tax, it argued that the federal policy would create an incentive to

384 I.R.C. §§ 61(a)(11), 108.
385 Id. § 108(f) (2020).
386 American Rescue Plan Act of 2021, Pub. L. No. 117-2, § 9675, 135 Stat. 185.
387 I.R.C. § 108(f)(5).
388 Borrower Pls.’ Br., supra note 357, at 23 (citing Neb. Rev. Stat. § 77-2714.01(1); Iowa Code § 422.7; Kan. Stat.
Ann. § 79-32,117(a); S.C. Code § 12-6-40).
389 Borrower Pls.’ Br., supra note 357, at 23.
390 Borrower Pls.’ Br., supra note 357, at 23.
391 Nebraska v. Biden, No. 4:22-cv-1040, 2022 WL 11728905 (E.D. Mo. Oct. 20, 2022).
392 Florida v. Mellon, 273 U.S. 12, 15 (1927).
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move property out of the state, resulting in lower general tax revenues for Florida.393 The Court
disagreed, holding that such an injury was too remote and speculative and could also potentially
be addressed by increasing the state’s rate of taxation.394
Second, in the Court’s 1976 decision in Pennsylvania v. New Jersey, Pennsylvania challenged a
New Jersey law that taxed nonresident income earned domestically, taxed resident nondomestic
income, and excluded resident nondomestic income subject to another state’s taxes.395
Pennsylvania provided a tax credit to residents for taxes paid to other states.396 As a result, the
taxes imposed by New Jersey on nonresidents resulted in tax credits against Pennsylvania
taxes.397 The Court held that Pennsylvania was not injured by the New Jersey law because
nothing required Pennsylvania to offer a tax credit for taxes imposed by other states.398 Therefore,
any claimed injuries to Pennsylvania’s tax revenues were self-inflicted.399
Third, in Wyoming v. Oklahoma, decided in 1992, Wyoming invoked the Supreme Court’s
original jurisdiction to bring a dormant commerce clause challenge to an Oklahoma law. The
Oklahoma law required Oklahoma coal power plants to use at least 10% Oklahoma-mined coal.
The law expressly evidenced an intent to reduce Oklahoma’s use of Wyoming-mined coal.
Wyoming argued that it was injured because the Oklahoma law would reduce Wyoming coal
production, resulting in less tax revenue from Wyoming coal-mining activities. The Court agreed,
holding that the loss of specific tax revenues, as opposed to a loss of general tax revenues
attributable to a decline in the state’s general economy, constituted direct injury for purposes of
Article III standing.400
The outcomes in Wyoming v. Oklahoma and Pennsylvania v. New Jersey may appear to be
divergent. To distinguish the two cases in subsequent litigation involving a state’s claims of
financial injury caused by changes in the laws of another sovereign, lower courts have noted that
in Pennsylvania v. New Jersey, the plaintiff states explicitly tied their finances to other states’
taxes on nonresident income, while Wyoming’s tax on domestic coal production was not
explicitly tied to the legislative enactments of Oklahoma.401
The federal petitioners in the student loan cancellation litigation have argued that the states’ tax-
injury challenge to the cancellation policy is foreclosed by Pennsylvania v. New Jersey.402
Because the state plaintiffs have chosen to enact their state income tax codes in a way that
directly incorporates by reference the federal treatment of discharges of debt, their claimed injury
is self-inflicted, as was Pennsylvania’s claimed injury.403

393 Id. at 17–18.
394 Id. at 18.
395 Pennsylvania v. New Jersey, 426 U.S. 600 (1976).
396 Id. at 663.
397 Id.
398 Id. at 664.
399 Id.
400 Wyoming v. Oklahoma, 502 U.S. 437, 448 (1992).
401 See California v. Azar, 911 F.3d 558, 574 (9th Cir. 2018) (federal rule exempting employers from mandate to cover
contraception would increase costs to state and local programs that provide contraception); Texas v. United States, 809
F.3d 134, 158 (5th Cir. 2015) (challenge to DAPA), aff’d by an equally divided court sub nom. United States v. Texas,
579 U.S. 547 (2016).
402 Federal Pet’rs’ Br., supra note 104, at 23.
403 Federal Pet’rs’ Br., supra note 104, at 23.
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For their part, the state plaintiffs argue that the situation is more like the Court’s decision in
Wyoming.404 They argue that they are alleging the loss of specific tax revenues, like the coal tax
revenues Wyoming claimed.405 They also argue that the case is distinguishable from the “self-
inflicted” harm in Pennsylvania v. New Jersey because their tax codes were enacted before the
cancellation policy existed.406
Is the Cancellation Policy Substantively Valid?
Assuming that the Court finds that one or more parties have standing to challenge the cancellation
policy, the Court would then turn to the question of whether the cancellation policy is a lawful
exercise of ED’s authority. Perhaps the most important part of this lawfulness inquiry, raised in
both Nebraska and Brown, is whether the HEROES Act authorizes the cancellation policy. This
section discusses disputed questions of the policy’s substantive validity.
Scope of HEROES Act Authorization
The HEROES Act allows the Secretary to “waive or modify any statutory or regulatory provision
applicable to the” Title IV programs “in connection with a . . . national emergency” to ensure that
“affected individuals are not placed in a worse position financially . . . because of their status as
affected individuals.”407 In the case of the cancellation policy, Secretary Cardona stated that he
was modifying statutory and regulatory provisions of the HEA that address loan cancellation and
discharge in particular circumstances, such as the death or permanent disability of the borrower,
to provide more broad-based relief.408 The Secretary also characterized these actions generally as
a waiver available to eligible borrowers.409 At the Supreme Court, the federal petitioners similarly
argue that the conditions under which borrowers are obliged to repay loans or obtain cancellation
or discharge, are “unquestionably statutory or regulatory provisions” applicable to the federal
student loan programs. Those provisions, the petitioners argue, are consequently susceptible to
waiver or modification by the Secretary to ensure that borrowers are not “worse off in relation to
their student-loan obligations because of the pandemic.”410
Therefore, examining whether the cancellation policy is authorized by the HEROES Act appears
to require answering the following questions: (1) Is cancellation of loan balances under the
cancellation policy a waiver or modification under the HEROES Act?; and (2) Does the
cancellation policy ensure that affected individuals are not placed in a worse financial position
because of their status as affected individuals? Each of these questions is discussed below.
Waiver, Modification, and the Major-Questions Doctrine
A central question during the debates leading up to and after the announcement of the
cancellation policy is how far the Secretary’s authority to “waive or modify” statutory and

404 State Pls.’ Br., supra note 104, at 24.
405 State Pls.’ Br., supra note 104, at 25.
406 State Pls.’ Br., supra note 104, at 25.
407 20 U.S.C. § 1098bb(a)(1).
408 Federal Student Aid Programs (Federal Perkins Loan Program, Federal Family Education Loan Program, and
William D. Ford Federal Direct Loan Program), 87 Fed. Reg. 61512, 61514 (Oct. 12, 2022).
409 Id.
410 Federal Pet’rs’ Br., supra note 104, at 36.
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regulatory provisions extends.411 In particular, much of the debate has focused on whether a
discharge of loan balances can fairly be included as a “waiver or modification” under the Act.
The federal petitioners assert that the Secretary has waived and modified Sections 437 and 464(g)
of the HEA, and accompanying regulations, to implement the cancellation policy.412 These
provisions respectively authorize the discharge of FDLP and Perkins loans made to borrowers
who are unable to complete programs of study due to a school closure.413 At oral argument, the
Solicitor General argued that
the straightforward way to think about how the verbs [waive or modify] map onto the
Secretary’s action is that he waived elements of those provisions that contain eligibility
requirements for discharge and cancellation that are inapplicable under this program and
then modified the provisions to contain the limitations that he had announced as part and
parcel of announcing this loan forgiveness.414
Stated otherwise, the Secretary waived the requirement under Sections 437 and 464(g) that a
borrower was unable to complete a program of study due to a school closure in order to receive a
discharge. The Secretary then modified Sections 437 and 464(g) to limit such relief to individuals
who met the income and other requirements described above.415
Whether the HEROES Act provides ED with the authority to implement the cancellation policy
likely turns on how broadly the text of the Act is read. When interpreting statutory provisions, the
Supreme Court begins with the text itself to determine whether the statutory language is plain.416
If so, then that plain meaning should control.417 At the same time, the Supreme Court has said that
provisions of a statute should not be read in isolation,418 and that courts must read those
provisions’ words in the context of the overall statutory scheme.419
Dictionary definitions of “waive” generally mean “[t]o refrain from insisting on.”420 Arguably
then, the HEROES Act’s authorization for the Secretary to waive a statute or regulation could be
read to mean that the Secretary could refrain from insisting on compliance with that law.
Similarly, dictionaries generally define “modify” as “[t]o make somewhat different,” “to make
small changes to,” “to make more moderate or less sweeping,” or “to reduce in degree or
extent.”421
In a January 12, 2021, memorandum written by ED’s then-Principal Deputy General Counsel
Reed Rubinstein (the Rubinstein memorandum), Rubinstein concluded that the terms “waive” or
“modify” under the HEROES Act did not include discharging loan balances.422 The Rubinstein

411 See 20 U.S.C. § 1098bb(a)(1).
412 87 Fed. Reg. at 61514 (citing 20 U.S.C. §§ 1087, 1087dd(g) and 34 C.F.R. §§ 674.51–674.64, 682.402).
413 20 U.S.C. §§ 1087, 1087dd(g). Section 437 nominally applies to FFELP, but is made applicable to the FDLP
through 20 U.S.C. §§ 1087a, 1087e.
414 Transcript of Oral Argument at 6:10–:18, Nebraska v. Biden, No. 22-506 (Feb. 28, 2023),
https://www.supremecourt.gov/oral_arguments/argument_transcripts/2022/22-506_5426.pdf.
415 See supra at “Cancellation Policy Design.”
416 King v. Burwell, 576 U.S. 473, 486 (2015).
417 Id.
418 Id.
419 Id.
420 Waive, BLACK’S LAW DICTIONARY (11th ed. 2019).
421 Modify, BLACK’S LAW DICTIONARY (11th ed. 2019).
422 Rubinstein Memo, supra note 98.
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memorandum focused on the term “modify” and relied heavily on the Supreme Court’s reading of
that term in MCI Telecommunications Corp. v. AT&T Co.423 In that 1994 case, the Supreme Court
interpreted a provision of the Communications Act of 1934 that required certain entities to file
tariffs with the Federal Communications Commission (FCC) but also authorized the FCC, “for
good cause shown,” to “modify any requirement” that the tariffing provision imposed.424 The FCC
purported to invoke that modification authority to make tariff filing optional for many
communications industry participants.425 Based on its dictionary definition, the Court concluded
that “modify” contemplates only a “moderate change” to the thing being modified and cannot be
used to enact “fundamental” changes.426 In the Court’s view, rendering a “crucial provision of the
statute” like the tariffing requirement inapplicable to “40% of a major sector of the industry” was
“much too extensive to be considered a ‘modification’” under the plain meaning of that term.427
More recently in 2022, the Supreme Court in West Virginia v. EPA described its holding in MCI as
an example of the major-questions doctrine.428 Under that doctrine, “separation of powers
principles and a practical understanding of legislative intent” make the Court “reluctant to read
into ambiguous statutory text” a delegation of authority to make a “radical or fundamental
change” to a statutory scheme without “clear congressional authorization.”429 Therefore, the
Court in West Virginia held that EPA’s general authority to regulate power plant emissions did not
empower the agency to “force a nationwide transition away from the use of coal to generate
electricity.”430 In another recent major-questions doctrine case arising during the COVID-19
pandemic, the Court held that the Centers for Disease Control and Prevention could not leverage
its authority to “make and enforce such regulations . . . to prevent the introduction, transmission,
or spread of communicable diseases” to create a nationwide residential eviction moratorium.431
Finding that the use of the HEROES Act to discharge loan balances would be a fundamental
change to the federal student loan programs, the Rubinstein memorandum concluded that
discharge was not within the scope of the Secretary’s authority to “waive or modify” under the
Act. After the Court’s decision in West Virginia v. EPA, OLC issued an opinion rejecting the
conclusions of the Rubinstein memorandum.432 OLC asserts that the major-questions doctrine
should not constrain the construction of the HEROES Act because the “sweeping” waiver or
modification language of the Act is unlike the “vague” or “ancillary” statutory text to which the
Court applied the major-questions doctrine in MCI and West Virginia. The HEROES Act text,
OLC contends, provides the “clear congressional authorization” that those other cases lacked.433
Throughout the course of the cancellation policy litigation, the applicability of the major-
questions doctrine on the construction of the HEROES Act has remained prominent. The U.S.

423 512 U.S. 218, 220, 224–25 (1994).
424 Id. (emphasis added).
425 Id. at 220, 231.
426 Id. at 228.
427 Id. at 231.
428 See West Virginia v. Env’t Prot. Agency, 142 S. Ct. 2587 (2022).
429 Id. at 2609. In a concurrence joined by Justice Alito, Justice Gorsuch further argued that the “major-questions
doctrine” protects the separation of powers by ensuring that the federal legislative power remains with Congress. Id. at
2617 (Gorsuch, J., concurring).
430 Id. at 2616.
431 Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 141 S. Ct. 2485, 2489 (2021).
432 OLC Opinion, supra note 76.
433 OLC Opinion, supra note 76, at 15.
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District Court for the Northern District of Texas, the only court thus far to issue a holding on the
scope of the HEROES Act, held that the major-questions doctrine applies and that the “broad or
general language” of waiver and modification is insufficiently clear congressional
authorization.434
Consistent with the OLC opinion described above, the federal petitioners have argued that the
HEROES Act is distinguishable from prior cases in which the Supreme Court has applied the
major-questions doctrine because the provisions of the HEROES Act are not the kind of “vague,
cryptic, ancillary, or modest” provisions at issue in previous cases.435 In their view, the major-
questions doctrine is not an opportunity to question any economically or politically significant
agency action.436 Rather, the Court has only applied the doctrine where an agency claims an
“extraordinary grant of regulatory authority.”437
In contrast, the HEROES Act’s modification authority is not part of the ordinary HEA framework
that governs the day-to-day aspects of federal student loan assistance. Instead, Congress enacted
the HEROES Act to authorize the Secretary to respond to extraordinary events, such as wars or
national emergencies, to provide “additional relief” to ensure that borrowers are not placed in a
worse position as a result of such events.438 In the federal petitioners’ view, broad grants of
authority to provide such emergency benefits do not “pose a serious threat to individual liberty”
and therefore do not implicate the same separation of powers concerns as broad claims of
regulatory authority.439
For their part, the plaintiffs argue that the application of the major-questions doctrine to the
cancellation policy is appropriate principally because the authority to discharge loan balances is a
“breathtaking” and “new application of the statute.”440 Additionally, the Nebraska plaintiffs argue
that the national emergency trigger for the exercise of the HEROES Act is not a significant limit
on the use of an asserted cancellation authority, because “Presidents routinely declare such
emergencies over all sorts of matters.”441 The plaintiffs also argue that major-questions cases are
not limited to cases involving regulatory actions, and point to King v. Burwell, a case in which the
Court declined to defer to an Internal Revenue Service interpretation providing a more generous
tax credit.442 In Burwell, the Court held that there was “reason to hesitate before concluding that
Congress” implicitly delegated to the agency the authority to answer a question involving billions
of dollars in spending and health insurance prices for millions of individuals.443 The federal
petitioners argue that Burwell is distinguishable from other major-questions cases because it did
not impose a clear statement rule and the Court ultimately upheld the agency’s interpretation of
the statute.444

434 Brown v. U.S. Dep’t of Educ., No. 4:22-cv-0908, 2022 WL 16858525 (N.D. Tex. Nov. 10, 2022).
435 Federal Pet’rs’ Br., supra note 104, at 50.
436 Federal Pet’rs’ Br., supra note 104, at 46.
437 Federal Pet’rs’ Br., supra note 104, at 47 (emphasis added); Reply Br., supra note 258, at 21.
438 See 20 U.S.C. § 1098bb(a)(2)(A).
439 Federal Pet’rs’ Br., supra note 104, at 49 (citing West Virginia v. Env’t Prot. Agency, 142 S. Ct. 2587, 2618 (2022)
(Gorsuch, J., concurring)).
440 State Pls.’ Br., supra note 104, at 32–33.
441 State Pls.’ Br., supra note 104, at 32, 33. See also CRS Legal Sidebar LSB10267, Definition of National Emergency
under the National Emergencies Act, by Jennifer K. Elsea.
442 State Pls.’ Br., supra note 104, at 37.
443 King v. Burwell, 576 U.S. 473, 485–86 (2015).
444 Reply Br., supra note 258, at 21.
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With respect to the terms of the HEROES Act specifically, the plaintiffs argue that the
cancellation policy cannot be achieved through a waiver or modification of the provisions cited
by the Secretary.445 As noted above, those provisions address discharge or cancellation in specific
contexts.446 Plaintiffs argue that justifying the cancellation policy as a “waiver” of these
provisions is not correct, because the Secretary is not merely refraining from insisting on
compliance with those provisions, but instead altering the terms to impose entirely different
limitations.447 Additionally, plaintiffs argue that such changes are not fairly construed as
“modifications” because they are not “small” or “moderate” changes.448 In response, the federal
petitioners note that the HEROES Act directs the Secretary to publish notice of “terms and
conditions to be applied in lieu of” waived and modified statutory and regulatory provisions.449
They argue that this language evidences Congress’s intent that HEROES Act relief could be
qualified with such added “terms and conditions.”450 The federal petitioners also argue that
adopting the modest reading of “modify” used by the Court in MCI does not make sense because,
under that reading, the Secretary would have the authority to eliminate legal obligations
wholesale through a waiver or modify them to a marginal degree but oddly would not be able to
do something in between.451
Ensuring Affected Individuals Not Placed in a Worse Position
Separately from whether loan discharge fits the HEROES Act’s waive-or-modify categories, the
parties also dispute whether the cancellation policy meets the Act’s additional requirements
limiting such “waivers or modification” to those “as may be necessary to ensure that . . . affected
individuals are not placed in a worse position financially in relation to that financial assistance
because of their status as affected individuals.”452
The HEROES Act defines “affected individual” to include, among other persons, any individual
who “resides or is employed in an area that is declared a disaster area by any Federal, State, or
local official in connection with a national emergency” or who “suffered direct economic
hardship as a direct result of a” national emergency.453 The HEROES Act in turn defines a
“national emergency” as “a national emergency declared by the President of the United States.”454
President Trump issued a national emergency declaration for the COVID-19 pandemic on March
13, 2020.455 President Trump also issued major disaster declarations related to COVID-19 in all
fifty states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern Mariana Islands.456 The national emergency

445 State Pls.’ Br., supra note 104, at 44; Borrower Pls.’ Br., supra note 357, at 48.
446 State Pls.’ Br., supra note 104, at 45.
447 State Pls.’ Br., supra note 104, at 46; Borrower Pls.’ Br., supra note 357, at 48.
448 State Pls.’ Br., supra note 104, at 45; Borrower Pls.’ Br., supra note 357, at 48–49.
449 20 U.S.C. § 1098bb(b)(2).
450 Reply Br., supra note 258, at 17 (emphasis added) (citing 20 U.S.C. § 1098bb(b)(2)).
451 Reply Br., supra note 258, at 16–17 (citing OLC Opinion, supra note 76, at 8).
452 20 U.S.C. § 1098bb(a)(1).
453 Id. § 1098ee(2).
454 Id. § 1098ee(4).
455 Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak, 85 Fed. Reg.
15337 (Mar. 13, 2020).
456 CRS Report R46326, Stafford Act Declarations for COVID-19 FAQ, by Elizabeth M. Webster, Erica A. Lee, and
William L. Painter at 1.
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declaration was annually renewed multiple times by the Biden Administration and ultimately
terminated on April 10, 2023.457 The major disaster declarations remain in effect. As a result, all
borrowers who currently reside in the United States appear to be “affected individuals” under the
HEROES Act.458 Those borrowers who do not reside in the United States might alternatively
qualify under the “economic hardship” definition of “affected individuals.”459 The litigants do not
appear to disagree that the scope of “affected individuals” encompasses all borrowers within the
United States.460 However, the plaintiffs argue that no determination of economic hardship has
been made with respect to overseas borrowers.461
Assuming that the scope of “affected individuals” is sufficiently broad, the next question is
whether the cancellation policy ensures that they are not placed in a worse position as a result of
their status as affected individuals. The federal petitioners argue that the Secretary “deem[ed]”
relief “necessary to ensure” that lower-income affected individuals “are not placed in a worse
position” because of the COVID-19 pandemic.462
For their part, the plaintiffs argue that the cancellation policy exceeds the HEROES Act because it
places many borrowers in a “far better position” than at the beginning of the pandemic.463 This is
in contrast to prior exercises of the HEROES Act, which they argue merely “maintain[ed] the
status quo,” such as delaying commencement of loan repayment, pausing collection on defaulted
loans, providing additional deferment and forbearance options, and pausing ongoing payment
obligations.464 The federal petitioners disagree with this characterization, noting that its
Supporting Analysis found that the pandemic had created a “risk that delinquency and default
rates will rise above pre-pandemic levels.”465
The litigants also contest the relationship between the harms the cancellation policy attempts to
address and the COVID-19 pandemic. The federal petitioners have asserted that the cancellation
policy is necessary to avoid an expected rise in delinquencies and defaults once repayment
restarts.466 However, the state plaintiffs argue that the asserted risks of default or delinquency for
borrowers are also attributable to conditions that predated the pandemic.467

457 86 Fed. Reg. 11599 (Feb. 26, 2021); 87 Fed. Reg. 10289 (Feb. 23, 2022); 88 Fed. Reg. 9385 (Feb. 14, 2023)
(anticipating termination of the emergency on May 11, 2023); H.J.Res 7, 118 Cong. (2023). In briefs submitted before
the termination of the national emergency, the federal petitioners have taken the position that expiration of the national
emergency prior to a decision by the Court would not affect the litigation, because the HEROES Act only requires that
waivers and modifications be “in connection with a . . . national emergency” and do not require that relief be provided
“during the emergency.” Reply Br., supra note 258, at 27 n.4.
458 See 2020 Federal Register Notice, supra note 88, at 79856, 79857 (declaring that any “student enrolled in a
postsecondary institution” qualifies as an “affected individual” for the purposes of the COVID-19 emergency).
459 See Reply Br., supra note 258, at 28–29 (citing 20 U.S.C. § 1098ee(2)(D)).
460 State Pls.’ Br., supra note 104, at 49; Borrower Pls.’ Br., supra note 357, at 54.
461 State Pls.’ Br., supra note 104, at 49; Borrower Pls.’ Br., supra note 357, at 54.
462 Federal Pet’rs’ Br., supra note 104, at 35–36.
463 State Pls.’ Br., supra note 104, at 40.
464 State Pls.’ Br., supra note 104, at 40.
465 Reply Br., supra note 258, at 15–16.
466 Federal Pet’rs’ Br., supra note 104, at 35–36.
467 Borrower Pls.’ Br., supra note 357, at 53; State Pls.’ Br., supra note 104, at 47.
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Is the Cancellation Policy Procedurally Valid?
Nebraska and Brown both raise the question of whether the HEROES Act provides substantive
authority to adopt the cancellation policy, but the cases also include claims challenging the
policy’s procedural validity. In Nebraska, the plaintiffs allege that the Secretary’s adoption of the
policy is arbitrary and capricious because the Secretary did not provide a reasonable explanation
for his action. In Brown, the plaintiffs attack the policy for being adopted without the Secretary
observing allegedly applicable requirements for public participation in the policy’s development.
The sections below discuss these disputed questions of the policy’s procedural validity.
Arbitrary-and-Capricious Claim
The last count of the Nebraska plaintiffs’ complaint alleges that the cancellation policy violates
the APA because it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.”468 This portion of the APA requires that an agency action be “reasonable and
reasonably explained.”469 The agency must “examine the relevant data and articulate a
satisfactory explanation for” its decisions.470 When performing this review, a court “simply
ensures that the agency has acted within a zone of reasonableness.”471 Arbitrary-and-capricious
review is “narrow” and does not allow a court to replace the agency’s policy judgment with the
court’s own.472
When the Supreme Court applies the arbitrary-and-capricious standard, a litigant typically bases
that claim on arguments that the agency relied on statutorily irrelevant factors; did not consider an
important part of an issue; or explained the decision in a way that contradicts the evidence before
it.473 A litigant also might claim that the justification that the agency offered for its action is
pretextual or “contrived” because there is a sufficiently large “disconnect between the decision
made” and the stated explanation.474 The Nebraska plaintiffs invoke each of these bases to have
the policy invalidated as arbitrary and capricious.
Whether the Secretary Considered Alternatives to the Cancellation Policy
First, the Nebraska plaintiffs say that ED did not consider “any alternative[]” actions that the
Secretary might take.475 According to these plaintiffs, statements in the Supporting Analysis
comparing loan discharges to a borrower enrolling in ED’s income-driven repayment (IDR) plans
allegedly focused instead on actions that the borrower might take to lower their monthly
payment.476

468 5 U.S.C. § 706(2)(A); see also Compl. ¶¶ 159–71, Nebraska v. Biden, No. 4:22-cv-01040 (E.D. Mo. Sept. 29,
2022).
469 Fed. Commc’ns Comm’n v. Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021).
470 Biden v. Missouri, 142 S. Ct. 647, 653 (2022) (internal quotation marks omitted).
471 Prometheus Radio Project, 141 S. Ct. at 1158.
472 Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).
473 Id.
474 Dep’t of Com. v. New York, 139 S. Ct. 2551, 2575 (2019).
475 State Pls.’ Br., supra note 104, at 50–51 (emphasis in original).
476 State Pls.’ Br., supra note 104, at 51; see also Supporting Analysis, supra note 10, at 4 (“Loan discharges can
reduce delinquency and default risks even though borrowers have other options to reduce monthly payments, like
income-driven repayment (IDR) plans.”).
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The Supporting Analysis stated that the visibility of the cancellation policy and the benefits it
offered would draw more borrowers to apply for the benefit than have enrolled in IDR as a result
of ED’s Office of Federal Student Aid’s efforts to increase enrollment in IDR.477 ED cited a
Federal Reserve Bank of Philadelphia study for the proposition that “lower-income individuals
were much less likely to expect to make full payments notwithstanding the existence of IDR
plans.”478 The Federal Reserve elaborated on this point, stating that the lower-income borrowers it
surveyed did not expect to make full payments after the payment pause “even though many of
those borrowers are likely to be eligible for or are already receiving payment reductions via
income-driven repayment.”479 Thus, ED appears to have considered alternatives to cancellation,
including its efforts to increase IDR enrollment, but concluded that the option of (or actual
enrollment in) IDR would not forestall the delinquencies or defaults it is attempting to avoid.
Reliance Interests
Second, the Nebraska plaintiffs argue that ED did not consider any reliance interests implicated
by the existing state of federal student loans.480 In particular, the Nebraska plaintiffs fault ED for
not considering “the States’ legitimate reliance interests” as “lenders, secondary market
participants” (i.e., participants in the SLABS market), and as “loan servicers.”481 ED does not
dispute the claim that it did not consider these interests. Instead, ED argues that it was not
required to consider any such interests, because they either are not “cognizable” or not
“serious.”482
The federal petitioners say that the Nebraska plaintiffs’ interests are not cognizable for the same
reasons that the interests fail to show financial harm for standing purposes.483 However, even
interests that are assertedly not legally cognizable can form an important enough part of an issue
that an agency risks acting arbitrarily or capriciously by ignoring those interests. The Supreme
Court’s 2020 decision in Department of Homeland Security v. Regents of the University of
California is an example.484 There, the Court examined rescission of the Deferred Action for
Childhood Arrivals (DACA) program, part of which provided forbearance of removal for certain
aliens without legal immigration status.485 The Court explained that an agency might act
arbitrarily and capriciously by not considering a reliance interests that is not “legally cognizable,”
meaning not backed by “substantive rights.”486 DACA recipients had no substantive right to
forbearance.487 Yet it was arbitrary for the Department of Homeland Security to rescind the
DACA program without considering the DACA recipients’ interests in continued forbearance.488

477 Supporting Analysis, supra note 10, at 5.
478 Supporting Analysis, supra note 10, at 4–5.
479 TOM AKANA & DUBRAVKA RITTER, FEDERAL RESERVE BANK OF PHILA., EXPECTATIONS OF STUDENT LOAN
REPAYMENT, FORBEARANCE, AND CANCELLATION: INSIGHTS FROM RECENT SURVEY DATA 8 (2022),
https://www.philadelphiafed.org/-/media/frbp/assets/consumer-finance/reports/covid-19-cfi-survey-student-loan-
repayment-external-report.pdf.
480 State Pls.’ Br., supra note 104, at 51–52.
481 State Pls.’ Br., supra note 104, at 15, 52 (internal quotation marks omitted).
482 Federal Pet’rs’ Br., supra note 104, at 60.
483 Federal Pet’rs’ Br., supra note 104, at 60.
484 140 S. Ct. 1891 (2020).
485 Id. at 1901.
486 Id. at 1913–14 (internal quotation marks omitted).
487 Id. at 1913.
488 Id. at 1913–14.
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The lack of a substantive right to continued forbearance merely affected the weight of this
reliance interest.489 Thus, the Nebraska plaintiffs’ second arbitrary-and-capricious argument
would appear to turn not on whether their interests as FFELP loan holders, SLABS market
participants, or student loan servicers are “cognizable” but whether the interests are “serious”
enough to have warranted express consideration by the Secretary.
Considering Important Aspects of a Problem and the Consolidation Limit
Third, the plaintiff states contend that the Secretary ignored other aspects of the cancellation
policy: its costs and ED’s duty under the Federal Claims Collections Standard (FCCS) Act490 “to
try to collect a claim of the United States Government.”491 The federal petitioners dispute that
they ignored the policy’s cost, citing their FCRA estimates of the policy.492 Moreover, the federal
petitioners argue that if the HEROES Act authorizes student loan cancellation, the FCCS does not
impose a conflicting demand to collect on amounts to be discharged.493
The Nebraska plaintiffs also argue that the Secretary did not reasonably explain the “arbitrary
distinction between borrowers who applied to consolidate non-federally held FFEL Loans before
September 29 and those who did not,” which they view as an illegitimate attempt at “[e]vading
judicial review.”494 The federal petitioners respond, though, that the fact that the policy would not
provide relief for all borrowers does not mean that the relief it would provide is either
unreasonable or not reasonably explained.495
Pretext
Fifth and finally, the Nebraska plaintiffs contend that the Secretary’s use of the pandemic as
justification for the cancellation policy is pretextual.496 The evidence of pretext offered has a few
facets. One facet is the Nebraska plaintiffs’ contention that the “current economic conditions” that
serve as the stated basis of the policy are not “solely” or even “primarily” attributable to the
pandemic.497 Another is that the contention that ED’s pandemic-related justification for the policy
is, in truth, a pretext for the President to “fulfill his campaign promise” to cancel debt once
Congress did not.498 The plaintiffs argue that the Administration has used the pandemic as cover
to address what it has elsewhere characterized as decades-old “systemic failings in federal
student-loan programs.”499
The ordinary rule in arbitrary-and-capricious review is that a court is limited to the “agency’s
contemporaneous explanation in light of the administrative record.”500 A court cannot reject an

489 Id.
490 See State Pls.’ Br., supra note 104, at 52.
491 31 U.S.C. § 3711(a)(1).
492 See Reply Br., supra note 258, at 30.
493 See Reply Br., supra note 258, at 31 (stressing that the HEROES Act authorizes secretarial actions
“‘[n]otwithstanding any other provision of law’” (quoting 20 U.S.C. § 1098bb(a)(1)).
494 See State Pls.’ Br., supra note 104, at 52–53.
495 See Reply Br., supra note 258, at 32.
496 See State Pls.’ Br., supra note 104, at 53.
497 State Pls.’ Br., supra note 104, at 47 (internal quotation marks omitted).
498 State Pls.’ Br., supra note 104, at 48.
499 State Pls.’ Br., supra note 104, at 48–49.
500 Biden v. Texas, 142 S. Ct. 2528, 2546 (2022) (internal quotation marks omitted).
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agency’s stated reasons because the agency “might have been influenced by [unstated] political
considerations or prompted by an Administration’s priorities.”501 The Supreme Court has
characterized pretext as a “narrow exception” to this general rule “against inquiring into the
mental processes of administrative decisionmakers.”502 When the Court has applied the pretext
exception, it has done so based on apparently much stronger evidence of contrivance than that
offered by the Nebraska plaintiffs.503
Department of Commerce v. New York saw the Court apply the pretext exception. There, the Court
considered a claim that the Secretary of Commerce’s decision to reinstate a citizenship question
on the 2020 Census questionnaire was arbitrary and capricious.504 The Commerce Department’s
stated reason for the addition was that DOJ had asked for the question so that it could use the
collected citizenship data to better enforce the Voting Rights Act (VRA).505 To assess that
proffered reason, the Court reviewed an administrative record that was “rare” in terms of its
size.506 According to the Court, the record disclosed that the Secretary of Commerce decided to
seek addition of the citizenship question “about a week into his tenure” but did not then offer a
reason for the addition to his senior staff.507 The Commerce Department then asked entities other
than DOJ’s VRA enforcement arm whether they would request that the question be included in
the Census questionnaire.508 The Commerce Department also considered its authority to add the
question without a request from another agency.509 Eventually, the Secretary of Commerce
contacted the Attorney General directly.510 DOJ’s VRA enforcement arm began showing interest
in the question, but even then “the record suggests that DOJ’s interest was directed more to
helping the Commerce Department than to securing the data.”511 To the Court, “the VRA
enforcement rationale—the sole stated reason—seem[ed] to have been contrived.”512
There arguably is not a complete administrative record regarding the loan cancellation policy in
Nebraska, much less one as “rare” and “extensive” as in the Census litigation.513 In Brown, the
federal petitioners unsuccessfully asked the district court not to consolidate the plaintiffs’
preliminary injunction motion with trial on the merits. ED said the merits decision “should await
production of the administrative record.”514 ED otherwise filed the same documents as its stated
justification in both cases.515 The filed documents do not reveal the same sort of evolving

501 Dep’t of Com. v. New York, 139 S. Ct. 2551, 2573 (2019).
502 Id. (internal quotation marks omitted).
503 See id. at 2574–76.
504 Id. at 2563.
505 Id. at 2562.
506 Id. at 2575.
507 Id.
508 Id.
509 Id.
510 Id.
511 Id.
512 Id.
513 Id.
514 Defs’ Resp. to Order on Advancing the Merits of Plfs’ Compl. at 4, No. 4:22-cv-00908-P, Brown v. U.S. Dep’t of
Educ. (N.D. Tex. Nov. 4, 2022); see also Decl. of James Richard Kvaal at ¶ 6, Nebraska v. Biden, No. 4:22-cv-01040
(E.D. Mo. Oct. 7, 2022) (explaining that the federal petitioners had filed materials such as the Supporting Analysis
“before the compilation and certification of an administrative record”).
515 The parties’ joint appendix, for example, states that ED filed in Nebraska and Brown identical versions of Secretary
Cardona’s August 24, 2022 Memorandum, related implementing memoranda, and the Supporting Analysis. See J.A. at
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justifications present in the Census litigation. Absent a contrivance finding, the Supreme Court
will likely assess whether the policy is “reasonable and reasonably explained” by focusing on the
justification that ED offered in decisional documents such as the Supporting Analysis, rather than
on other possible, unstated reasons.516
Public-Participation Claim
The Brown plaintiffs’ complaint includes a single claim under the APA.517 That claim seeks to
“hold unlawful and set aside agency action, findings, and conclusions found to be without
observance of procedure required by law.”518
The Brown plaintiffs allege that the Secretary was required to seek public participation in
developing the cancellation policy.519 In particular, they assert that the Secretary should have
followed a two-step process: negotiated rulemaking under the HEA,520 followed by notice-and-
comment rulemaking under the APA.521 The Secretary did not follow these procedures.522
The federal petitioners dispute that the policy is subject to either of these public participation
requirements, and they offer two arguments explaining why. Both arguments rely on provisions of
the HEROES Act that except the Secretary’s waivers and modifications from public participation
requirements. Both exception provisions appear in 20 U.S.C. § 1098bb. The exceptions reference
APA notice-and-comment rulemaking and HEA negotiated rulemaking in particular.
Section 1098bb(b)(1) references APA notice-and-comment rulemaking. It states that,
notwithstanding the APA’s notice-and-comment requirement, “the Secretary shall, by notice in
the Federal Register, publish the waivers or modifications of statutory and regulatory provisions
the Secretary deems necessary to achieve the purposes of this section.”523 Section 1098bb(d)
references HEA negotiated rulemaking. It states that the HEA provision “shall not apply to the
waivers and modifications authorized or required by this part.”524
The federal petitioners posit two views of how these provisions except secretarial actions from
public participation requirements. One view is that because the HEROES Act in fact authorizes
the policy, both public participation exceptions apply to the policy.525 Whether the HEROES Act
authorizes the policy is discussed elsewhere in this report.526

II n.*, Biden v. Nebraska, No. 22-506, and Dep’t of Educ. v. Brown, No. 22-535 (U.S. Jan. 4, 2023) (“Exhibits A-C to
the First Declaration of James Richard Kvaal in Brown” are “identical to Exhibits A-C to the Declaration of James
Richard Kvaal in Nebraska (D. Ct. Doc. 27-1).”).
516 Fed. Commc’ns Comm’n v. Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021); see also Biden v. Texas, 142
S. Ct. 2528, 2547 (2022).
517 Compl. ¶¶ 62–73, Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-P (N.D. Tex. Oct. 10, 2022).
518 5 U.S.C. § 706(2)(D).
519 Compl. ¶¶ 72–73, Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-P (N.D. Tex. Oct. 10, 2022).
520 See supra notes 357–362 and accompanying text (describing the negotiated rulemaking requirements of the HEA
codified at 20 U.S.C. § 1098a).
521 See supra notes 363–364 (summarizing the notice-and-comment requirements of the APA codified at 5 U.S.C.
§ 553).
522 Borrower Pls.’ Br., supra note 357, at 34.
523 20 U.S.C. § 1098bb(b)(1).
524 Id. § 1098bb(d).
525 Federal Pet’rs’ Br., supra note 104, at 64.
526 See supra at “Scope of HEROES Act Authorization.”
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The second view is that the HEROES Act’s procedural exceptions apply to the Secretary’s
waivers or modifications regardless of whether the Act authorizes those actions.527
More specifically, the federal petitioners argue that “the notice-and-comment exception does not
depend on whether, as a substantive matter, the HEROES Act actually authorizes the Secretary’s
action.”528 Rather, the notice-and-comment exception only requires that the Secretary determine
that “the HEROES Act applies and that waivers or modification are necessary.”529
The federal petitioners further argue the HEROES Act “cannot plausibly be read to condition the
procedural exception” from negotiated rulemaking “on the substantive validity of the Secretary’s
action.”530 Negotiated rulemaking prepares “‘proposed regulations’ for public comment.”531 Yet,
as noted above, the federal petitioners say that the Secretary’s determination that the HEROES
Act applies means that a particular action does not need to undergo public comment. If the
Secretary does not need to publish his action for public comment, the federal petitioners contend,
then he also does not need to engage in negotiated rulemaking that is aimed at producing
regulations for comment.532
The HEROES Act states that negotiated rulemaking does not apply to “the waivers and
modifications authorized or required by” the Act.533 To say that an action is “authorized by” a
statute is to say that the statute “sanction[s]” or gives “legal authority” for the action.534 While
this rule is not inflexible,535 courts generally prefer to read a statute in a way that avoids treating
text as surplus.536 Moreover, if secretarial action is excepted from negotiated rulemaking by virtue
it of being excepted from notice-and-comment rulemaking, the Act arguably would not require a
separate subsection that specifically references negotiated rulemaking.537 Thus, the Supreme
Court might conclude that unless the HEROES Act authorizes secretarial action, the Act’s
negotiated rulemaking exception does not apply.
The exception for notice-and-comment rulemaking is perhaps a closer call. The Supreme Court
has sometimes reasoned that when Congress includes language in one part of a statute but omits it
elsewhere “Congress acts intentionally and purposefully in the disparate inclusion.”538 Unlike the

527 Federal Pet’rs’ Br., supra note 104, at 62.
528 Federal Pet’rs’ Br., supra note 104, at 62.
529 Federal Pet’rs’ Br., supra note 104, at 63.
530 Federal Pet’rs’ Br., supra note 104, at 63.
531 Federal Pet’rs’ Br., supra note 104, at 63 (quoting 20 U.S.C. § 1098a(b)).
532 Federal Pet’rs’ Br., supra note 104, at 63.
533 20 U.S.C. § 1098bb(d).
534 Authorize, BLACK’S LAW DICTIONARY (11th ed. 2019) (“To give legal authority; to empower. . . . To formally
approve; to sanction); Authorize, MERRIAM-WEBSTER UNABRIDGED (“to endorse, empower, justify, or permit by or as if
by some recognized or proper authority . . . . to endow with authority or effective legal power, warrant, or right”),
https://unabridged.merriam-webster.com/unabridged/authorize (last visited Apr. 14, 2023).
535 Rimini St., Inc. v. Oracle USA, Inc., 139 S. Ct. 873, 881 (2019) (“Sometimes the better overall reading of the statute
contains some redundancy.”).
536 Bd. of Trs. of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 563 U.S. 776, 788 (2011) (noting the
Court’s “general reluctance to treat statutory terms as surplusage” (internal quotation marks omitted)).
537 But see Freeman v. Quicken Loans, Inc., 566 U.S. 624, 635 (2012) (noting that Congress sometimes engages in
“lawyerly iteration” by having different statutory terms “all mean the same thing”).
538 Russello v. United States, 464 U.S. 16, 23 (1983) (internal quotation marks omitted).
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subsection of § 1098bb that addresses negotiated rulemaking, the notice-and-comment subsection
does not state that its exception applies to waivers and modifications “authorized by” the Act.539
The Brown plaintiffs argue, though, that reading the notice-and-comment rulemaking exception in
context of the section as a whole shows that the HEROES Act excepts from notice-and-comment
rulemaking only waivers and modifications that are authorized by the Act. Section 1098bb begins
by stating in paragraph (a)(1) that the Secretary “may waive or modify any statutory or regulatory
provision applicable to the student financial assistance programs under” Title IV of the HEA “as
the Secretary deems necessary in connection with a war or other military operation or national
emergency to provide the waivers or modifications authorized by” paragraph (a)(2).”540 Paragraph
(a)(2) then states that the Secretary “is authorized to waive or modify any provision described in
paragraph (1) as may be necessary to ensure that” stated purposes are achieved.541 The Brown
plaintiffs say that these are “the waivers and modifications” that the Act then excepts from notice-
and-comment rulemaking in paragraph (b)(1): waivers and modifications authorized under
subsection (a).542 Therefore, if the Secretary acts outside of the authorization of subsection (a), the
Secretary may not rely on the exception to notice-and-comment rulemaking in subsection (b).
Potential Implications of Nebraska and Brown
Nebraska and Brown pose multiple contested legal issues, and it is difficult to predict how the
Court might resolve questions such as the plaintiffs’ Article III standing or the scope of authority
that Congress delegated to the Secretary by enacting the HEROES Act. Despite this uncertainty,
decisions in Biden and Brown are likely to have implications falling into at least three general
categories. Most directly, the decisions likely will determine whether ED may begin discharging
debt under the cancellation policy. The decisions may also shape the Secretary’s authority to
invoke the HEROES Act in the future to waive or modify provisions of law in times of war, other
military operations, or national emergencies. Finally, the decisions could shape legal doctrines
with effects extending beyond federal student loan programs.
Potential Effects on the Cancellation Policy
The immediate consequences of the Supreme Court’s decisions in Nebraska and Brown will be
for the cancellation policy itself. For the policy to be implemented, the Court would likely reach
one of two general conclusions: (1) that all of the plaintiffs lack standing, meaning that federal
courts do not have jurisdiction to consider the merits of any claim, or (2) that the claims of
plaintiffs who the Court concludes have standing lack merit. If the Court reaches such a
conclusion, it would likely set aside the Eighth Circuit stay pending appeal and affirm the
Missouri trial court’s judgment. Further, the Court would also presumably vacate or reverse the
Texas district court’s judgment of vacatur.
On the other hand, if the Court determines that a plaintiff has standing and that the HEROES Act
does not authorize the policy, the Court’s opinion could direct that plaintiffs are to prevail in their

539 Compare 20 U.S.C. § 1098bb(b)(1), with id. § 1098bb(d).
540 Id. § 1098bb(a)(1).
541 Id. § 1098bb(a)(2) (emphasis added).
542 See Borrower Pls.’ Br., supra note 357, at 38.
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suits. For example, the Court might affirm the Texas district court judgment of vacatur. In that
event, ED would be unable to implement the cancellation policy.543
It is also possible (though perhaps not probable) for the Court’s decisions to leave issues for
lower courts to decide, in which case the cancellation policy’s fate would not be finally
determined by the Court’s opinion. For example, the Court could potentially agree with Missouri
that financial harm suffered by MOHELA directly harms the state as well. The Court could
determine, though, that the parties should further litigate in the lower courts the extent of
financial harm, if any, that MOHELA is likely to suffer on account of the policy, such as the
amount of “fees for discharging accounts” that MOHELA might realize from implementing the
policy.544
Potential Effects on HEREOS Act Authority
Decisions in Nebraska and Brown may also shape the Secretary’s authority to invoke the
HEROES Act in times of war, other military operations, or national emergencies. Perhaps most
importantly, the decisions could accelerate the end of the existing payment pause. The end date of
the existing pause is expressly contingent, in part, on when the Nebraska and Brown litigation
resolves. The payment pause will end 60 days after the earlier of (1) the date that the litigation is
resolved, whether by a ruling in favor of the plaintiffs or the federal petitioners, or (2) June 30,
2023.545
Moreover, private lenders that offer refinancing for existing student loans have challenged the
existing payment pause as unlawful.546 If those private lender claims are not mooted by the
payment pause ending by its own terms, the Court’s decisions could inform resolution of that suit
as well.
The scope of authority that the HEROES Act grants to the Secretary is the core merits question in
both Nebraska and Brown. If the Court reaches this scope-of-authority question, its decision
could significantly impact the waivers and modifications that could issue in the future under the
Act. For instance, if the Court agrees with the federal petitioners’ reading of the HEROES Act,
future Administrations could perhaps provide similar loan cancellation so that borrowers are not
placed in a worse position financially because of a war, other military operation, or national
emergency.
On the other hand, if the Court agrees with the plaintiffs’ more narrow reading of the HEROES
Act, future Administrations would have relatively less authority to provide relief to borrowers and
others under the Act. Much will depend on the particular rationale provided by the Court. The
Court could, for example, hold that broad-based cancellation is never permissible under the
HEROES Act. Alternatively, the Court could decide that loan cancellation is not per se unlawful,
but that in this instance the causal connection between the COVID-19 national emergency and the
policy was not sufficient under the Court’s reading of the Act.

543 See, e.g., Final J., Brown v. U.S. Dep’t of Educ., No. 4:22-cv-00908-P (N.D. Tex. Nov. 10, 2022) (“The Court
DECLARES UNLAWFUL and VACATES the Program.”).
544 See supra notes 237–239 and accompanying text.
545 See COVID-19 Emergency Relief and Federal Student Aid, FED. STUDENT AID,
https://studentaid.gov/announcements-events/covid-19 (last visited Apr. 14, 2023).
546 Compl. ¶ 7, SoFi Bank, N.A. v. Cardona, No. 23-CV-599 (D.D.C. Mar. 3, 2023) (alleging that the existing payment
pause is unlawful because it “applies to all federal borrowers in the country, not just those suffering hardship as a result
of the current phase of the pandemic”).
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Potential Effects on Broader Legal Doctrine
Though the core merits question in both Nebraska and Brown is the Secretary’s authority under
the HEROES Act, the cases also pose questions for the Court that could have consequences
outside of the federal student loan context: Article III standing and the Court’s major-questions
doctrine.
States shape contemporary legal doctrine in their capacity as plaintiffs challenging federal
government action,547 and the Court’s resolution of the varied Article III standing theories in
Nebraska could either facilitate or limit this role in certain cases. For example, the Court could
clarify when alleged financial impacts to state investments or state tax revenues constitute injury-
in-fact. The Court’s decision could also help clarify whether financial separation between a state
and a separate entity that the state established and controls prevents the state from directly basing
its own standing on harm suffered by that entity.
If the Court reaches the HEROES Act scope-of-authority question, its rationale could provide
further guidance regarding how the federal courts should apply the major-questions doctrine. In
particular, the Court’s decisions in Nebraska or Brown may address whether the doctrine applies
to agency claims of statutory authority to provide a benefit in a similar manner as the doctrine
applies to agency assertions of statutory authority to impose a regulatory requirement.548

Author Information

Edward C. Liu
Sean M. Stiff
Legislative Attorney
Legislative Attorney

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547 E.g., Dep’t of Com. v. New York, 139 S. Ct. 2551 (2019).
548 Federal Pet’rs’ Br., supra note 104, at 49 (distinguishing, for purposes of the major-questions doctrine, between
authority to provide “benefits” and “grants or regulatory authority” (internal quotation marks omitted)).
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