January, 2023
Lincoln — Is pressure building on the Nebraska attorney general to drop or settle Nebraska v. Biden, which seeks to undo the Biden Administration's student loan cancellation plan? For Nebraska borrowers, the debt relief could total as much as $2 billion and help an estimated 200,000 or more individuals.
But it is not only potential beneficiaries who are questioning the wisdom of the lawsuit. New developments show serious concerns from conservative law professors, fiscal watchdogs, and businesses.
In an amicus brief filed with the Supreme Court, Notre Dame professor Samuel Bray and University of Chicago professor William Baude, both notable conservatives, are advising the Court to deny Nebraska and other plaintiffs standing to sue, so that the Court does not sit "in constant judgment of every major executive action — which is not its constitutional role."
Meanwhile, an analysis by three University of Virginia economists shows who is benefitting from the lawsuit, which is keeping the pandemic-related student loan repayment pause in effect until the lawsuit is resolved: "Our analysis shows the across-the-board pause on federal student loan payments disproportionately benefits the most affluent borrowers. Continuing the payment pause without means-testing its benefits leads to ballooning costs for taxpayers."
On January 18, a Nebraska-based major student loan servicer announced layoffs of 560 employees. According to Business Insider:
The company confirmed in a statement that 350 of those employees were hired in the past six months after Biden announced up to $20,000 in debt relief to help with what was expected to be high call volume as the relief was implemented and student-loan payments were turned back on. But the debt relief has been blocked.... [T]he lack of work for those additional employees led to this decision.
This is surely not the way the Nebraska attorney general and his five fellow plaintiffs expected the lawsuit to unfold. They originally fixated on challenging the president's emergency powers to cancel debt, but in so doing they are creating a constitutional issue regarding legal standing, extending a regressive and wasteful fiscal policy and, in the process, hurting their own economies and businesses.
Ironies abound. Nebraska has shot itself in both feet, even before considering how the debt relief would aid middle and low-income families to assist a sluggish Nebraska economy.
Moreover, this week the U.S. Government Accountability Office released a report condemning the U.S. Department of Education for halting investigations of college misrepresentations (mostly by for-profit schools) during the Trump administration (no surprise there). This has created even more dubious student loan debt that will have to be cancelled under "borrower defense" or other statutes.
There is a way to settle the lawsuit quickly. The Biden administration does not have to use emergency powers to cancel debt. There is already statutory authority authorizing it. Agreement and action on that point should satisfy the plaintiffs, allow the U.S. Department of Education and its loan servicers to get back to work, save taxpayers from wasteful spending on regressive policies, and avoid a constitutional crisis over standing.
We should thank those who have come forward, consumer advocates and conservatives alike, to point out the folly of this lawsuit, a half-baked scheme that originated in a dark-money den — Koch-funded American Commitment — with scant to no input from Nebraska citizens and taxpayers.
We should also thank in advance any media sources that explain these issues to Nebraskans, few of whom know anything about the lawsuit's huge consequences that hang in the balance.
