Amy Coney Barrett Might Have Undermined Student-Debt Relief Lawsuit

• Justice Amy Comey Barrett may have signaled how the Supreme Court might rule on student-loan forgiveness.
• In a Thursday ruling, Barrett said Texas did not have standing to sue the federal government on behalf of its citizens.
• There’s a similar issue in a lawsuit brought on by six GOP-led states who sued Biden over debt relief.

The Supreme Court has not issued its decision on President Joe Biden’s student-loan forgiveness plan just yet — but a new opinion in an unrelated case could shed some light on how the nation’s highest court will rule.

On Thursday, conservative Justice Amy Coney Barrett delivered the opinion on the case Haaland vs. Brackeen, which challenged the Indian Child Welfare Act of 1978 that allowed Native American children to remain with Native American families in custody battles.

The state of Texas was among the petitioners who sued the federal government over the ICWA and claimed the law was unconstitutional for employing “racial classifications that unlawfully hinder non-Indian families from fostering or adopting Indian children,” according to the opinion. It also claimed the law exceeded federal authority and infringed on state sovereignty.

The Supreme Court majority opinion, authored by Barrett, ruled 7-2 that none of Texas’ challenges had any merit, upholding the ICWA.

“The issues are complicated,” Barrett wrote. “But the bottom line is that we reject all of petitioners’ challenges to the statute, some on the merits and others for lack of standing.”

The issue of standing, which revolves around whether plaintiffs actually have the right to sue, has proved significant in this case — and is also set to be central to the court’s decision on student-debt relief. 

Standing dominated the justices’ lines of questioning during oral arguments in February for the two lawsuits that paused the implementation of Biden’s plan to cancel up to $20,000 in student debt for federal borrowers. For a plaintiff to prove they have standing to sue, they would have to show they would be injured by the policy, that the injury can be directly traced back to the defendant, and that the relief they’re seeking would address those injuries.

One of the lawsuits, Biden vs. Nebraska, was brought on by six GOP-led states who argued, in part, that the relief would hurt the revenue of student-loan company MOHELA. Meanwhile, Texas was suing the government on behalf of parents, and while the student-debt case is certainly different from that one, the question of standing persists.

However, there’s a legal theory called “parens patriae” that says states can have standing to sue on behalf of their citizens only if they have a “sovereign interest” at stake, according to the theory. David Nahmias, a staff attorney with the UC Berkeley Center for Consumer Law and Economic Justice, told Insider that this theory “has been used to find standing for, for instance, states that are challenging particular federal policies, like the EPA policies, or policies that might have harm to the welfare of their citizens or business practices that are harming a certain part of the community.” He also noted that in addition to proving parens patriae standing, states must also prove they meet the basic requirements of constitutional standing.

And that theory influenced Barrett’s decision to dismiss Texas’ claims. She referenced a 1982 Supreme Court decision that said “[a] State does not have standing as parens patriae to bring an action against the Federal Government,” meaning that states cannot rely on that legal theory of standing to sue to protect its citizens from federal law.

“That should make the issue open and shut,” Barrett wrote. Her reasoning could signal how she — and other justices — might handle one of the major student-loan forgiveness cases and its similar issues of whether states can sue on behalf of other entities.

The role of standing in the student-debt lawsuit

Six Republican-led states sued the Biden administration over his student-loan forgiveness plan in the lawsuit Biden vs. Nebraska, arguing the relief would hurt their states’ tax revenues and the revenue of student-loan company MOHELA. 

During the February oral arguments, Barrett — along with liberal justices — scrutinized the states’ standing to invoke MOHELA in their case, even though MOHELA itself was not present in court and had previously denied any involvement in the lawsuit. 

“Do you want to address why MOHELA’s not here?” Barrett asked James Campbell, a solicitor general for Nebraska who represented the states.

“Why didn’t the state just make MOHELA come then?” she asked. “If MOHELA is an arm of the state, why didn’t you just strong-arm MOHELA and say, ‘You’ve gotta pursue this suit?'”

Campbell told Barrett that “that’s a question of state politics, but we believe as a matter of law that the state has the authority to assert its interests,” but Barrett continued to push back, arguing that “it would be hard to see how a win for the state would benefit MOHELA, or a win for MOHELA would benefit the state, if the assets are completely separate — you don’t get any money out of it.”

Still, the states may have a stronger case for standing in the student-debt case than Texas did. Nahmias pointed out that the distinction between the decision Barrett issued on Thursday and the student-debt lawsuit is that the six GOP-led states “were really arguing that they were directly injured. I think they tried not to make this argument about the parens patriae theory of standing probably because they know it’s not a winning argument.”

So, while the two cases have their differences, and the Supreme Court could choose to handle them differently, Barrett’s thought process could suggest she — and other justices — are considering whether the six GOP-led states have standing to bring this case against the federal government. A final decision is expected in the coming weeks.

“Texas claims that it can assert third-party standing on behalf of non-Indian families,” Barrett wrote in a footnote. “This argument is a thinly veiled attempt to circumvent the limits on parens patriae standing.”