The Supreme Court spent more than three hours Tuesday examining President Joe Biden’s student-loan cancellation plan, testing both whether the challengers have legal standing to sue and whether the executive branch can use pandemic-era emergency authority to cancel debt for tens of millions of borrowers.

The administration’s program would cancel up to $10,000 in federally held student debt for eligible borrowers and up to $20,000 for qualifying Pell Grant recipients, subject to income limits. The Congressional Budget Office estimated last fall that the cancellation component would increase federal costs by roughly $400 billion over time, making the litigation one of the most consequential fiscal and administrative-law disputes before the Court this term.

Standing comes before the merits

The first case, Biden v. Nebraska, was brought by six states challenging the Department of Education’s authority. The Court’s argument transcript shows the justices devoting substantial attention to Missouri’s asserted injury through the Missouri Higher Education Loan Authority, or MOHELA, a state-created loan servicer. The threshold issue is whether Missouri can rely on an injury to that entity to establish the concrete harm required for federal-court jurisdiction.

The administration argues that MOHELA is legally separate from Missouri and can sue and be sued in its own name. If the states cannot establish standing, the Court cannot reach the question of whether the debt-relief program is lawful. The case docket contains extensive briefing over the relationship between Missouri and MOHELA, reflecting how a seemingly technical jurisdictional issue could determine the fate of a national policy.

A second case, Department of Education v. Brown, was brought by individual borrowers who say the administration’s process denied them an opportunity to seek a broader program through notice-and-comment rulemaking. The Court heard that challenge the same day; its audio record shows similarly close questioning about whether the plaintiffs’ alleged injury can be traced to the debt-cancellation policy and redressed by a judicial ruling.

The HEROES Act at the center

If the Court reaches the merits, the dispute turns principally on the Higher Education Relief Opportunities for Students Act of 2003. The administration says that statute allows the education secretary during a national emergency to “waive or modify” student-aid provisions so affected borrowers are not placed in a worse financial position because of the emergency. The government’s merits brief argues that the COVID-19 emergency and the economic consequences of resuming repayment justify broad relief under that authority.

The challengers contend that “waive or modify” cannot reasonably be read to authorize cancellation on this scale. Conservative justices repeatedly pressed Solicitor General Elizabeth Prelogar on whether the program is qualitatively different from the targeted adjustments Congress had in mind when it enacted the HEROES Act for military personnel and others affected by national emergencies.

The administration’s reply brief responds that Congress deliberately gave the secretary flexible emergency powers and did not limit relief to small changes. It argues that the legal question is not whether Congress used the word “cancel,” but whether eliminating or reducing repayment obligations is a permissible waiver or modification of statutory and regulatory provisions governing federal loans.

The major-questions doctrine looms

Several justices raised the Court’s major-questions doctrine, under which agencies need clear congressional authorization for decisions of extraordinary economic and political significance. The doctrine has become increasingly important in disputes over executive-agency power. The challengers say a program affecting hundreds of billions of dollars and millions of borrowers is precisely the kind of action that requires unmistakable authorization from Congress.

The administration counters that the doctrine should not override the text Congress actually enacted. It also argues that the education secretary is acting in the core field Congress assigned to the department: federal student-aid obligations during a declared national emergency. The Court’s recording captures sharp exchanges over whether the scale of the program changes the statutory analysis or simply reflects the scale of the pandemic’s effect on borrowers.

That question reaches beyond student loans. A broad ruling could further define how courts evaluate emergency powers and major agency actions across environmental, health, labor and financial regulation. A narrow ruling on standing could avoid those questions while still deciding whether these particular plaintiffs may challenge the policy.

The litigation has already prevented the administration from discharging balances. Millions of borrowers submitted applications before lower-court orders blocked implementation. Meanwhile, the federal student-loan payment pause remains in effect under a separate policy while the cases proceed.

The Supreme Court placed both cases on a specially focused February argument calendar, reflecting the urgency created by the nationwide injunctions and the administration’s request for expedited review. The justices are now considering not only the legality of the program but the institutional question of who gets to contest it.

The practical stakes are unusually direct. For an eligible borrower, the difference between the program surviving or being invalidated can be $10,000 or $20,000 of principal. For the federal government, the aggregate cost is measured in hundreds of billions. For the Court, the case offers another opportunity to define the limits of executive action when an old statute is invoked to address an emergency on a scale Congress did not specifically describe.

A decision is expected by the end of the Court’s current term. Until then, borrowers, servicers and the Education Department remain suspended between a debt-relief program announced as national policy and judicial orders that prevent it from taking effect.