How the Show Me State Could Show 'Em Again—Bring Missouri Into the Litigation Challenging Biden's New Student Loan Forgiveness Plan [Updated to Note Missouri Has Previously Announced it Will Do What I Urge Here]

Last Friday, I wrote about the new lawsuit filed by eleven red states challenging President Biden's new massive student loan forgiveness program. As I noted in that post, this case in many ways resembles  Biden v. Nebraska, the 2023 case in which the Supreme Court invalidated the administration's previous gigantic  loan forgiveness plan.

One of those parallels is that the administration is likely to try to prevail by arguing that the plaintiff states lack "standing" to bring the case, because they haven't suffered a relevant injury. In Biden v. Nebraska, the Supreme Court (and lower courts) ruled that the plaintiffs succeeded in getting standing because the state of Missouri (one of the six state plaintiffs in that case has  a state agency –  the Higher Education Loan Authority of the State of Missouri (MOHELA)—that services federally backed student loans, and MOHELA's income would be reduced if some of those loans were forgiven.

As discussed in my last post, Louisiana, one of the plaintiffs in the new case, has a state student loan agency that appears to be similar to MOHELA. But it may not be exactly the same. Among other things, it is not clear whether it still services federally backed student loans, as well as providing its own loans. Thus, it might be possible for courts to distinguish the Louisiana agency from MOHELA. The plaintiff states do have other theories on which they could get standing. But these are not clear winners under current Supreme Court precedent.

But the plaintiffs' standing problems could almost easily be resolved if the state of Missouri were to join the case! Then they could use the exact same reasoning that prevailed in Biden v. Nebraska. If even a few of the loans that would be forgiven (or partially forgiven) under the new plan are serviced by MOHELA, that agency stands to lose income if the plan is implemented, and that in turn would be an injury to the state!

The Biden administration and other supporters of its previous loan forgiveness plan raised a variety of arguments against the MOHELA standing theory (e.g.—they argued that MOHELA's administrative separation from other state agencies meant the state could not raise claims based on injuries to MOHELA). But all of these were rejected by the Supreme Court in Biden v. Nebraska. And it's highly unlikely the Supreme Court would reverse or significantly limit that precedent now.

I was actually somewhat surprised Missouri isn't already included in the lawsuit challenging the new loan forgiveness plan. Almost all of the legal, moral, and policy objections to the original plan also apply to the new one (I summarized them here and here). Both plans would exacerbate our already severe fiscal crisis, both are regressive, both manipulate vague statutes for the purpose of raiding the Treasury, both create perverse incentives for universities (we can raise tuition, expecting Uncle Sam to pick up much of the tab!), and both are unfair to taxpayers, including non-college graduates and people who paid off their student loan debt without a federal bailout. If Missouri leaders objected to the previous loan forgiveness plan on these types of grounds, I suspect they oppose this one, too.

Perhaps Missouri simply doesn't want to work with odious Kansas Attorney General Kris Kobach, the man spearheading the eleven state-lawsuit (Kobach has been sanctioned by federal courts for various types of misconduct, on several occasions). If that's their concern, I can understand it; I am no fan of Kobach, myself. Or perhaps there is some other reason why they could not or would not make an arrangement with the other plaintiff states.

If so, nothing prevents Missouri from simply filing their own suit challenging the plan! It would be in a different circuit (the Eighth) from the one where Kansas filed its case (the Tenth). Even if the Kansas-led suit ultimately failed for lack of standing, Missouri's could still prevail.

Obviously, it is possible that the Biden Administration could win the suit on the merits, even if the plaintiffs do have standing. But, for reasons summarized in my last post, the merits case against the plan is strong, bolstered by Biden v. Nebraska. At the very least, definitively eliminating the standing issue would be an important step forward for those challenging the new plan.

I wish this step were not necessary. People seeking to challenge illegal government expenditures shouldn't have to resort to the kind of circuitous tactics that prevailed in Biden v. Nebraska. In my long-held view, any taxpayer should have standing to challenge illegal government expenditures. The taxpayers are the ultimate—and usually the most important—victims of such abuses of power. For those keeping score, I also held that view when blue states and others challenged Donald Trump's attempt to divert military funds to build his border wall, which I also opposed. But the Supreme Court is highly unlikely to adopt taxpayer standing anytime soon.

At the same time, it is also unlikely to reverse the standing holding in Biden v. Nebraska. That creates a great opportunity for the Show Me State to Show 'Em Again! I hope they will rise to the challenge.

UPDATE: It turns out Missouri has already initiated its own separate lawsuit challenging the new plan, announced on March 29, a day after the lawsuit led by Kansas. I was very busy  the last couple days, and somehow missed this development.  I apologize to readers for this oversight.