What’s the difference between “waiving” and “modifying,” and how does that affect whether the President of the United States can forgive student loan debt?
In this episode, we sit down with Stetson Law Professor Mark Bauer to discuss Biden v. Nebraska, the Supreme Court case that struck down the Biden administration’s partial student loan forgiveness efforts. On the way we consider the major questions doctrine, the vagaries of standing, and how sometimes―just sometimes―your work in antitrust law gets made into a Hollywood movie.
Transcript:
Speaker 1 (00:03.022)
What I said to my students is that it's not that I question the concept that there might be a major questions doctrine, but the court has given us absolutely nothing to work with in terms of when it's invoked or not. It seems to be a prospective decision that, well, this is too, you know, the act may say literally that the secretary can waive or modify, but with our, we're gonna pull in the major questions doctrine here and poof, it's too big to decide.
Episode 32, Student Loan Forgiveness and Biden v. Nebraska. I'm Daniel O'Keefe, Master of English Literature from Indiana University. Today we're joined by Professor Mark Bauer.
Professor Bauer teaches antitrust, administrative law, property, consumer law, and financial advocacy. He also supervises Stetson's externship program in elder consumer protection law and Stetson's full semester federal agency externship. He served as Stetson's associate dean for academics from 2009 to 2011. So today we're discussing the Biden administration's attempts to cancel, or at least partially cancel,
student loan debt and the Supreme Court decision, Biden v. Nebraska, back in 2023 that overturned that effort. Obviously, with lots of Supreme Court cases, the issue of politicization comes up and as a 6-3 decision about a controversial political topic, you know, this is one of those cases that falls into that bucket. But first, I suppose I'd like it if you could give us some background about the case and about how the student loan debt cancellation plan came about.
We've had problems with student loans for some time now. While people talk about the overall illiquidity, the teetering on financial collapse of the system, but that's not really the case. Even in this case, the Supreme Court said something about, well, moderate interest rates. The interest rates are actually not all that favorable, and most people do repay, and the entire system is actually quite profitable.
Speaker 1 (02:10.542)
As long as the profits are rolled back into the system, there's some benefit to it. But the mere fact that there is a tremendous amount of outstanding student loan debt, it's more a factor of there are 350 million people in the United States and 46 million of them are student loan borrowers. And that just adds up over time. A very large amount of those people, of the 43 or 46 million people with student loans, about 20 million have under...
$20,000 in debt or under $10,000 in debt, should say. Mostly for people who are taking some form of a professional certification course, a technical certification course. Sometimes those are quite worthy and get them into a job, into a field. Sometimes they're just for show. Sometimes they are not, they are predatory in nature. But we've been having problems overall with the system with both the cost, the access, student loan default.
And because of the wide availability of student loans, many would argue that there is no pressure on colleges and universities to save money where they can because revenue can come in at any point. Again, I'm not sure, I think any extreme of a point is going to inherently render it silly. But I think there are some truths buried inside all of that. I I spent
Many days over the past two weeks going through budget meetings where we're looking to save money, save money, save money. So I don't know if that's entirely fair to blame cost rising at colleges and universities. But in any case, we have a cumbersome student loan system. Back in the day, the student loans when I was in college, the student, which is now back in the day, the student loans were issued by private entities, typically banks that were selected because they would process
be paid for their processing loans and sell the loans right back to a Fannie Mae, Freddie Mac type organization that would allow them additional capital then issue more loans. Thing is that the profit, the windfall profits from that were over the top. And under the Obama administration, the decision was made to bring those student loans in-house and basically pass the savings on to the borrowers. That's worked out really well. And I can tell you from the university standpoint,
Speaker 1 (04:33.122)
processing loans that come in from the federal government all on the same day and all with a good deal of timeliness is very different from when there were banks across the country, sometimes submitting, sometimes not, sometimes submitting wrong forms, us not being able to get students money. And so I think the level of student satisfaction with the borrowing directly from the federal government is higher now than it was with private entities. But
What happened, while we've been talking about defaults and we've been talking about problems with excessive student loans, either based on the cost of the schools or students just not spending the money necessarily wisely, borrowing more for living expenses that they may have, it was sort of at a slow boil. There were issues here and there. And one issue being that there were several predatory for-profit institutions that didn't provide any value.
and the Department of Education increased certain standards about average salaries, the ability to repay student loans, whether there were misrepresentations made, particularly again by predatory for-profit schools, about people's career chances and salaries upon graduation. And there were lots of fights because the secretary is clearly authorized to waive and forgive student loans in a situation like that where there was fraud. A lot of those things just weren't happening. And particularly in the Trump administration,
under Secretary DeVos, she was ordered to do that several times by courts and failed to do so. But on the other hand, in March of 2020, the beginning of the pandemic, the Secretary DeVos and the Trump administration made a decision that they would suspend student loan payments in interest for a period of time. That was done under the authority of something called the Heroes Act, which was originally passed after 9-11 and dealing with
both problems arising from 9-11 itself, as well as the following wars in Iraq and Afghanistan to help people directly involved by waiving or modifying or otherwise providing some assistance in paying their student loans. That was meant to sunset some years afterwards, but Congress extended it and made it a permanent power. actions of Secretary DeBose were challenged to some degree, but I don't think anything really came of it during the pandemic.
Speaker 1 (06:57.898)
lots and lots of government entities made lots and lots of decisions that had not been made before but were within their power to do so because the circumstances were so extraordinary. What happened later was when President Bush was, President Bush, don't mind me, when President Biden was running for office, he campaigned on some student loan forgiveness, looking at the fact that some of it has been predatory and some of it is late fees built on
You know, interest compounded on late fees on interest compounded on it. It's like the proposal was sort of to get back to what students really owed and to try and cut out junk fees. In fact, it's been a practice of this administration to look very seriously at all sorts of junk fees. And I consider the treatment of student loans to be within the broader category of junk fees that the administration is trying to eliminate. In any case, so
The plan was for the Secretary of Education to waive or modify student loans, where if you had an income below $125,000, you would have $20,000, excuse me, $10,000 discharged. And if you were a Pell Grant recipient, which is being used as a proxy for lower income, as a Pell Grant recipient, you would have $20,000 discharged.
And that's what was challenged in the Missouri versus Biden case. The case was weird. It involved six states. Missouri was the nameplaint if sometimes that's just how the caption case is.
For some reason I thought Nebraska was the one that typically got listed.
Speaker 1 (08:38.578)
I keep doing that. I've done that for the past two weeks. Well, because I...
Well, I know because it's Nebraska is the one that gets named in the case, but then it's the bank from Missouri. That was the main reason for the court claiming that.
That is my greater point. I often talk to students about how cases are captioned, and it actually depends on the court. And you can't ever assume anything about the way a case is captioned. Famous antitrust case against Brown University for price fixing and tuition actually was nothing about Brown University because it settled years earlier. And the case was against MIT, but Brown bore the honor of having its name in the price fixing case. But that's legal trivia that I've always been fascinated by.
Yeah, the case was Nebraska, but Missouri was essentially the lead plaintiff. And the situation to begin with is that Missouri delegated its power over higher education loans, serving higher education loans, dealing with Missourians with such issues through a quasi-independent government corporation called the Missouri Higher Education Loan Administration.
It's been interesting to see that organization has informally let it be known that they had no interest in suing, that there is a reason that they didn't sue, and that people should look at Missouri having dealt with this and not the Missouri Loan Authority. In any case, Missouri brought the case and the first issue came down to whether the state of Missouri actually had the standing to sue to stop student loan forgiveness.
Speaker 1 (10:21.166)
And exactly where is the connection to the state of Missouri in all of that? And the connection, at least in my opinion, was kind of tenuous. The court looked at a standing argument by saying that the Missouri higher ed loan authority, they go by an acronym, I'm never sure how to pronounce it, Mahola, something like that. They are
yeah, I've heard.
Speaker 1 (10:49.61)
an awardee of a contract with the Department of Education, as are many vendors out there to help service student loans. And apparently they're paid about $84 million a year for their work servicing student loans by the Department of Education. Taking the worst case scenario imaginable, if everyone who could possibly be eligible in Missouri got the full amount of the discharge, that would in theory roughly approximately mean that
the Missouri loan authority would not get $44 million in revenue afterwards. And because of that loss, the state asserting that its own injury was that, was allowed to make it through the courts. The Supreme Court considered standing as the first issue. So it was a little hard to...
follow the argument because there's not much of an argument to the argument. They use a lot of cases as analogies where, for example, Amtrak has some First Amendment obligations, even though it's an independent corporation chartered by the government. The examples were at that level. And they went from that, the basic concept of
a quasi-government corporation maybe being bound by the Constitution in certain capacities as a state actor or a federal actor to Missouri could sue on behalf of a loan authority that was a private corporation that have an interest in suing. The dissent took that on immediately saying, why is this case even here? Where's the logic in granting standing? And they would have dispensed with it at that point.
And I know that was, I believe that was one of the arguments that has been made about the potential political motivations for the decision was that they're overstepping the significant issue of standing, which apparently a lot of court watchers thought there was a decent chance it would get thrown out simply because of that. And that decision as well as well, as well as I think, what was it, 303 Creative, like both of them had questions about standing right at the same
Speaker 1 (13:08.674)
It's always an issue. mean, so we're far beyond the world of someone slipping and falling and suing someone who may be responsible for their injuries. What we're looking at nationwide is well-financed efforts by policy organizations, think tanks, and other entities in the shadowy worlds of nonprofit and political entities.
and they're being funded often through yet another layer of nonprofit public interest law firms to seek out test cases and to bring them. In many of those situations, the authority or the right or the statutory right of these entities to bring suit is a little sketchy at best. It's hard for me to, I think that you can look at that as
a political decision, but it's got fewer fingerprints than other political decisions in that the standing arguments are very academic, very, very in the weeds of the rules of civil procedure. And it seems, it would seem odd to me to grab onto a case with the most shaky of legal reasoning to have jurisdiction over it, and then to use that as a forum to effectuate large scale change.
First of all, it seems very happenstance that, this case managed to get it this far. So that's great. We're going to use it now to change what we're thinking. It's a little more Machiavellian and a little bit more conspiracy oriented than I think may be entirely true. On the other hand, you can look at it that in the off chance that one of these cases on a social cultural issue does make it to the Supreme Court.
come hell or high water, they'll find a way to find sanding. You know, I think it's just the answer though, there are a lot of things that you can point to and say, well, that reeks of politics. And you know, this may because it's hard to contextualize it, but at the same time, it's a very, very technical legal decision that rarely can be pointed to as objectively wrong.
Speaker 2 (15:27.502)
Yeah, so I wanted to ask you a little bit about, so you were saying that it was the Heroes Act was specifically the law that was being used in order to make this decision to allow the waving of, or the canceling rather, I I guess the definition of waving and modifying is part of the issue here. But the canceling of student loan debt for 20 million people.
So I suppose the question I want to ask you is what you think of the interpretation of the Heroes Act here that we get in this decision, because you were mentioning before that it was used during the Trump administration as grounds to suspend payments on student loans, but then it gets used here as well as grounds to cancel student loan debt, and the Supreme Court takes issue with that in this decision. So I guess I'm curious about what you make of that interpretation.
Well, are essentially two, so the first issue was standing and then there are two other issues. And I'm not sure that there is really a clean line between the other two issues. The first is that the Heroes Act provided the Secretary of Education with statutory authority to waive or modify student loans. And as a result of that, and I'll get more into it, but the court went through a very, very, very tortured,
for snickety analysis of what the words wave and modify meant. And as Justice Kagan said in the dissent, sometimes when you separate things out from their context and you examine them under the microscope, you're going to come to a meaning that would not be obvious if you read it in context of the whole sentence, the whole paragraph, the whole page. Interestingly, Justice Barrett in her concurrence was using that argument to support the majority.
We'll get back to waver modified, but it was all sort of premised or wrapped around a broader question that the Supreme Court is considering this term in another case. The Supreme Court has already issued some opinions and it's called the major questions doctrine.
Speaker 2 (17:39.662)
I was going to ask you about that in a little bit.
And the major questions doctrine also relates quite closely to something called the non-delegation doctrine and something called the Chrysler two-step, excuse me, Chevron two-step, don't mind me. okay. Yeah, no, the Chevron two-step. And what we're dealing with overall is Congress delegating power to federal administrative agencies, Congress delegating to the executive branch.
To a large degree, it's the way our system was designed. There are many people who are not familiar with the law who say to me, well, who are these unelected bureaucrats? Why are they making decisions? There's no way to run a country without some of that. Particularly in a common law system like the United States, we don't have a practice of writing incredibly specific laws. That's how common law really developed in the first place.
Laws set out broad responsibilities and then it is up to an administrative agency to basically create an instruction manual of how to follow the law. Those are put into federal regulations that go through a process of their own allowing for public input and then they essentially have the same standing as law. The question is what types of delegations are permissible for federal agencies and
which go too far. So at a base level, you have the thing called the non-delegation doctrine, which when I went to law school, there had only been one or two cases in the entire history of the United States on the non-delegation doctrine, and both effectively said, don't worry about it. It must be something completely insane to violate the non-delegation doctrine. Other than that, you need an intelligible principle. And as long as Congress is bounding an agency with discretion within an intelligible principle,
Speaker 1 (19:38.082)
they can figure out the nuts and bolts of how to apply a law. Well, there have been over the past seven years or so, attack after attack after attack after attack with the non-delegation doctrine with the Supreme Court appearing ready to rein it in, although thus far it's mostly done it through the major questions doctrine, which is very much connected to it.
Okay, so when you say the, just for my own understanding here, so when you say the non-delegation doctrine, is that the same as Chevron deference?
No, there are three separate doctrines here. You deal with delegation from Congress to the executive branch. Okay. The bare bones basic level, or at least what it's been since, for the history of this country, is that the non-delegation doctrine only becomes a problem when Congress grants authority to the executive branch that does not have an intelligible principle reigning it in.
Okay, okay.
Speaker 1 (20:32.952)
very squishy standard, almost until recently, almost no one had violated the non-delegation doctrine. So then this case focused very heavily on the major questions doctrine. And the major questions doctrine is sort of, well, Justice Barrett would disagree with what I'm about to say, but Justice Kagan would agree though. The major questions doctrine is hard to reconcile with textualism.
in that if you were to be snarky about it, you could say the major questions doctrine kicks in when you really don't want something to happen even if the text says it should. That would be a very snarky way to phrase it. Effectively saying that if there is a decision being made by federal agency that is economically or politically significant, very large economic or political significance, unless it's
specifically and literally and directly spelled out in the grant of delegation from Congress to the executive branch, then the opposite is assumed that clearly they couldn't possibly have wanted to do this. This is way too big. If it was something this big, they would have said so specifically. And since they didn't say so specifically, the agency can't possibly have the power to do it. The Supreme Court spent a lot of time in the decision playing with the words wave and modify and
and had one terrible, terrible sentence in there that I think lots of other commentators have made the joke, but in case anyone listening hasn't heard the joke, they said, the French Revolution modified the status of the French nobility. And I would not be the first person to say, yeah, and the Supreme Court read that and said, let them eat cake.
One argument that I heard that was opposed to the Supreme Court's interpretation in that case was the idea that somehow modify means too little, but wave means too much. You can completely get rid of it or you can make tiny little tinkering changes, but somehow...
Speaker 1 (22:41.038)
You
Speaker 2 (22:49.494)
the Biden decision was in this negative Goldilocks area where it was like, no, this is too much, but also too little.
It makes your head spin to some degree. So when I teach administrative law, I'm a great believer in the rule of law. And in this country, I work for the federal government as an attorney. I went after bad guys. I feel strongly about public service. I would have to explain decisions to my students that make no sense. I feel their frustration as students, but also my frustration as someone who's trying to model
respect for the rule of law for the court system for the United States. And so here, you know, we get into this microscopic interpretation of whether modifying can be something so broad, whether what wave really means, but on the other side of things, once we come to the conclusion that they can waver modify, well, waiving or modifying something this big is too big a question that they wouldn't have just left to the agency. And so by the mere absence of it,
we're saying there had to have been the existence of it. And so, you know, it's really hard to wrap your hands around something like that.
Hmm
Speaker 2 (24:04.634)
I'm glad that you brought up your own professional focus on administrative law. I'm curious to ask you just a little bit about how you got into that field in the first place. What was it about administrative law that drew you?
Well, the first one was the advice that I give students that I didn't learn until law school. missed this one. I missed whatever orientation session in college they might have said this is that if you like a topic, bad professor will ruin it for you for life. But if you find a good professor, take whatever course that professor is teaching because they will make you enjoy it. And I didn't learn that in college, but I learned that in a law school.
And my favorite professor was teaching a whole series of courses that I took and oddly I ended up practicing in them and teaching them. And I tell him that when I see him periodically and he, I can't decide whether he thinks I'm just sort of a detached stalker at this point. He doesn't do what the praise is well, but.
I'm
Speaker 1 (25:04.694)
I enjoyed antitrust and administrative law tremendously in law school. And my first job from graduation was this sort of weird fusion job where I was clerking for an administrative law judge. The judge I was clerking for was the chief immigration judge of the United States. So it made me a Department of Justice honors attorney, but in the weird situation of being a judicial law clerk, which is typically not in an executive branch agency, it's in the judicial branch.
And being at the heart of the immigration court system, and my job being to help run the immigration court system and come up with legal reasoning to support decisions, I learned so much about how the federal government worked. At the time, there was another immigration crisis at the border where not that dissimilar to what's going on now. I think the numbers were lower, but not that much lower. And it was when there was a
Civil War in both El Salvador and Nicaragua. And we had a policy in the United States that someone from Nicaragua, because it was a socialist regime, could get asylum almost automatically, while someone from El Salvador, which was an ally of ours and in having an authoritarian regime, but they couldn't get it. And so what happened was you had a few hundred thousand people show up in South Texas. And it's interesting because that situation was handled to a point that you don't even hear about it today. How is it handled?
Well, mean, hundreds of thousands of people were showing up. They kept them at the border. They built a tent city. flew on not, everyone in the immigration court system was on 24 seven, 365 duty. And they brought down, the caseloads were building up in the cities, but they brought all the immigration judges and asylum officers and everyone to the border. And they process those hundreds of thousands of people and eliminated the problem.
And it was interesting to me because the Senate bill on immigration that appears to be failing, called for a similar approach in terms of funding more asylum officers and being able to make more judgments directly at the border. So that was really, being involved in that one year out of law school, which was a major political and current events issue and something that I think that we were handling really confidently.
Speaker 1 (27:21.582)
show me what the federal government can do when the federal government wants to do something, wants to do it well, wants to do it efficiently, and wants to treat the people who are in the system with honor and dignity and the respect that they deserve. It was a really positive experience. But my goal had been to practice antitrust law, and I had a deferred offer from the Federal Trade Commission that when my clerkship ended, I went to the Federal Trade Commission and...
I was an attorney there who reviewed very, very, very, very large mergers to determine whether the merger of enormous companies would violate the antitrust laws.
Yeah, could you tell me a little bit about that? That was actually the transition worked perfectly because I was going to ask you about exactly that, about working at the FTC.
was exciting. was, now I don't know. I couldn't say everyone would find it as exciting as I did, but that was what I wanted to do. mean, one of the advantages of working for the federal government or the state government as a junior attorney is that, you know, the giant private law firms are on the other side. You know, it's not like there's some...
handicap standard where you do something relatively bad as a federal attorney and you get an extra 10 points because of your handicap for it. It's not golf. You have to work as hard as the private sector attorneys without any of the backup. mean, without anything. I will never forget a few nights where I'm pulling all-nighters or thereabouts and I really am hungry but I can't afford to get a pizza because I'm being paid some tiny fraction.
Speaker 1 (28:57.942)
of what the private attorneys are who, when I went to private law firms, meals were brought in every single night automatically. But to be in a situation as a junior attorney where you're given a tremendous responsibility, tremendous discretion, yes, it's the federal government, so there are five layers of hierarchy approving anything significant, as it should be if you're doing things in the name of the United States of America. But in terms of day-to-day legal decisions, legal operations, and my practice,
I couldn't, I mean, I went to a private law firm after that and I had nowhere near as much authority, discretion and autonomy to do what was great. I learned so much as a federal attorney. It's a fantastic experience.
Yeah, I was looking at your bio online and you mentioned that after you were done working at the FTC, you moved to Chicago. You mentioned that you represented the defendants in a multi-billion dollar, multi-district price fixing case. Could you talk a little bit about that? That sounds intriguing.
Did ever see the informant? Damon? Yes. That's the case.
Absolutely. That's the case? that's remarkable.
Speaker 1 (30:04.59)
or that's a portion of, I tell my students that I'm just like Matt Damon and I'm the kindest person, they don't laugh the way I'd like them to.
I can't tell you how delighted I am that you mentioned that because when I was looking at you specialized in antitrust, thought I should ask him if he's ever seen the informant. And then I thought, nah, that's too frivolous.
No, there are two books about the whole situation. One called Rats in the Grain, which was very unfavorable to the main protagonist in the movie. Not unfair, it was harsh on him and perhaps justifiably so. And the other was called The Informant, the one that was made into a movie and that took a much more charitable look at him. And the story was that Archer Daniels Midland, which advertised itself as both the supermarket to the world and America's largest company that you've never heard of because what it
it did is create the inputs for everything else, the inputs for seeds, the inputs for cattle feed, the inputs for fertilizer, for everything. It made the Earth grow by producing, I mean, they produce a lot of basic things, but among them are amino acids and some basic gases like carbon dioxide. And so there was, there were allegations that all of, most if not all of the amino acids,
citric acid, carbon dioxide, all of these major, major inputs because very few companies worldwide were making them. They were all engaged in a price fixing conspiracy. And originally there were four defendants against federal government, class action lawsuit and several individual lawsuits for billions and billions and billions and billions of dollars. What I didn't know because I hadn't seen the informant yet since didn't happen in another 10 years.
Speaker 1 (31:50.458)
All of a sudden, one day I walk into the office and ADM is no longer a co-defendant. All of a sudden, do not share any information with ADM. ADM is now working for the government. What? Where did that come from? And if you watch the movie, you can see the long tortured explanation of how that happened. Yeah. But yeah, know, it's price fixing of carbon dioxide, which is the specific portion that I worked on for almost three solid years.
It doesn't sound very sexy. But when you consider the damage to the economy and damage to consumers and the fact that these, it's white collar crime and these major responsible corporations doing things because they don't think they're going to get caught or that only the little guys go to jail, not white collar criminals and they're not criminals. In fact, I find the movie, Informant really helpful in pouring into that of how
people, white collar criminals look at themselves in a way that is radically different from other people who are breaking the laws. And I don't mind. I mean, I've only been deputized once. I've never had extensive criminal powers, but I certainly don't mind getting billion dollar penalties for people like that.
Mm, yeah. Wow, that's fascinating. Well, thank you so much for being here.
it's my pleasure. You just had me talk about things that I'm interested in talking about for a while and that was fun.
Speaker 2 (33:18.03)
That's what we like to do here. This has been Real Cases. Thank you for listening. Check back for more episodes about an array of legal topics presented by the Stetson University College of Law. Learn more at stetson.edu.
Topics: Real Cases Podcast
