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Melissa Harris-Perry: All right, y'all, it's The Takeaway. It's Wednesday. I'm Melissa Harris-Perry, and let's go ahead and get to it.

On Tuesday, the Supreme Court heard two arguments over whether President Biden has the authority to forgive millions of dollars in federal student loan debt. The legal challenges come after Biden announced a plan last year that would forgive up to $20,000 in debt for some borrowers.

Now, this could affect an estimated 40 million borrowers across the country and wipe out more than 400 billion in federal student debt. The Department of Education has said that 26 million people already applied for the debt relief last year after the plan was announced, but it was put on temporary hold by the Eighth US Circuit Court of Appeals.

That all happened back in November as we were sliding into the holidays. These legal challenges are asking whether the Biden administration has the authority to forgive student loan debt under the 2003 law that was called the Higher Education Relief Opportunities for Students, or reasonably called The HEROES Act. One of the things the justices spoke about was the fairness of the plan. Here's Justice Neil Gorsuch.

Justice Neil Gorsuch: What I think the argue that is missing is cost to other persons in terms of fairness. For example, people who've paid their loans, people who have planned their lives around not seeking loans, and people who are not eligible for loans in the first place, and that a half a trillion dollars is being diverted to one group of favored persons over others.

Melissa Harris-Perry: Here's Justice Sonia Sotomayor questioning the US Solicitor General who's defending the forgiveness plan.

Justice Sonia Sotomayor: Everybody suffered in the pandemic, but different people got different benefits because they qualified under different programs, correct?

US Solicitor General: That's right. There's been enormous relief efforts.

Justice Sonia Sotomayor: There's inherent unfairness in society because we're not a society of unlimited resources. Every law has people who encompass it or people outside it. Correct?

US Solicitor General: That's correct.

Justice Sonia Sotomayor: That's not an issue of fairness. It's an issue of what the law protects or doesn't.

Melissa Harris-Perry: The supporters and advocates for student debt cancellation gathered outside of the Supreme Court building ahead of the arguments.

Supporters and Advocates: Cancel student debt. Cancel student debt. Cancel student debt now.

Melissa Harris-Perry: One of the people there was Kat Welbeck. She's Director of Advocacy and Civil Rights Council at the Student Borrower Protection Center, and Kat's joining me now. Welcome back to The Takeaway.

Kat Welbeck: Hi, Melissa. I'm so happy to be here.

Melissa Harris-Perry: Okay, so this was a wild line of questioning for me. Can you talk a little bit about this narrative of forgiveness as unfairness?

Kat Welbeck: For sure. I really love that you played both clips because I really think the second one was really getting at the crux of this idea of fairness in student debt. I think first when we're talking about student debt and fairness, I think we need to even talk about what student debt is, who has student debt, and why. Student debt is inherently about who has wealth and who has access to wealth in this country. If you're rich, you don't have student debt to pay for college.

Already in it, student debt embodies so many systemic disparities that we have in our country. That's why we see that women hold two-thirds of student loan debt, why we see that Black and Latino borrowers have not only more student debt than white borrowers, but why we see also greater struggles of repayment.

I think there's one element of understanding that itself that student debt is emblematic of many of the inequities in our country, but then, two, there were many people again that struggled during the COVID-19 pandemic and our government said, "We're going to create programs to help our small businesses, to help people because we realize when people are struggling, this is one way to make sure that we're helping our communities and keeping people afloat."

One of those programs was the payment pause. This student debt cancellation is one way to make sure that as we're exiting out of our COVID-19 protections and programs, we're making sure that we're not sending student loan borrowers back into a broken and dysfunctional student loan system, just setting them up for default.

Melissa Harris-Perry: We'll get into the law of this for a moment, but I need to pause on this for a moment again because it did sound to me and I feel like I hear you echoing it, but I just want to put this all the way down where the goats can get it, that Justice Gorsuch was saying that student loan forgiveness would be unfair to adults who come from wealthy families because--

[laughter] I don't mean to laugh, but it really is-- I knew that he meant to be trying to say it more broadly, like people who had already paid off their debt or he talked about people who maybe had better financial planning or something, maybe people who went to schools that the school was wealthier, and then the school had more money to give in terms of aid that wasn't loans, but I'm wondering if at the core it just boils down to somehow this is unfair to kids who had wealthy parents.

Kat Welbeck: So much of these cases that were before the court yesterday are just really sham lawsuits. What we're really talking about is do we want to deprive economic opportunity and freedom for 40 million people because talking about fairness for wealthy people but really thinking about what's at the crux of these cases there's sometimes I'm like, "Wait, I have to take a step back. Is this what we're really saying?"

Even in one of the cases, two of the plaintiffs were people who said, "I have student loans, but--" One wasn't eligible for the $20,000 because they weren't a Pell Grant recipient. Again, they weren't low-income enough to qualify for $20,000, and then one person who wasn't eligible because they had the wrong type of federal loan. Again, their remedy was saying because we couldn't get more, no one should get this program, which is in itself a little bit absurd.

Melissa Harris-Perry: Having laid out the absurdity, Kat, let's walk through first based on what you were hearing yesterday, talk to me a bit about the case that came from the six Republican-led states and what the plaintiffs and defendants are arguing in that line of argument.

Kat Welbeck: From the Eighth Circuit case, we essentially have six states. We have attorney generals from South Carolina, Arkansas, Missouri, Nebraska, and Kansas, and the Iowa Solicitor General. They were suing on behalf of MOHELA. MOHELA is a student loan servicer. They contract with the Department of Education to manage people's student loan payments. Their argument was essentially that cancellation would decrease the profits of MOHELA. Again, a very large student loan servicer.

It's a Missouri-based student loan servicer. However, it's not part of the Missouri government. Essentially what they're saying is we're going to pursue on behalf of this company because there could be lost revenue. Again, we're protecting a large company versus the rights of 40 million people in our country, but essentially, what the Department of Education, President Biden, what the government is saying is that MOHELA is not a party to the suit. How do you even have standing to bring this claim?

Really, what's at the core of this case is can these attorneys generals and this one solicitor general, can they actually even bring this case to a federal court if you're not even really a party to the claim and can't really articulate a harm?

Melissa Harris-Perry: Why are they? That feels really critical to me, this idea that, look, the states are not harmed. In fact, there'd be a lot of reason to believe that local governments, state governments, and certainly the economies of our states would have an important economic benefit that would come if all of a sudden dollars that were going to federal student loans instead were able to go into, for example, local real estate markets or purchasing a car and paying a local property tax on them. That from a pure fiscal standpoint, loan forgiveness ought to open up dollars from millions that would benefit state economies. Right?

Kat Welbeck: Exactly. Student debt cancellation what we've seen is research has shown, just like you said, student debt, it inhibits people from being able to buy homes, to be able to start their own businesses, being able to even have the money to save down the road, being able to even just have enough money not to be living paycheck to paycheck. Literally, again, talking about a program that could literally put money back into people's pockets every single month so they can invest back into their communities.

Again, like many other government programs, we realize when we are able to help people and give people more access to relief, we're able to really benefit our entire communities. People are able to have more fruitful lives, being able to, again, buy a home, like you said, buy a car, being able to start a business, so many other things that people are able to do. Again, hearing stories from people who said, "For the first time I was able to buy a house during the pandemic because of the payment pause."

Or people who say stories about student loan borrowers who said for the first time they were able to build up an emergency savings. We actually have a real example of this through the payment pause as people talked about this economic freedom and these opportunities they were able to have because they weren't paying these student loans every month. Or for some people, it was just literally a lifeline during COVID when they're experiencing job loss or really significant financial distress or harm. Again, you would think what's much more important is the financial benefit of the many versus a couple of states suing to block this for seemingly political reasons.

Melissa Harris-Perry: Quick pause. We're going to be back with more on the Supreme Court and student debt relief right after this. [music]

Melissa Harris-Perry: All right. Back with Kat Welbeck of the Student Borrower Protection Center. Can you talk to me about what you heard, either in terms of the oral arguments or in terms of how justices were responding? What do you think? Does the President have the legal authority to do this?

Kat Welbeck: Actually, I'm really glad again, like you said, rightfully called the Heroes Act what a wonderful law. The Heroes Act, the authority, really, it's created for times just like this. The idea of the Heroes Act is that the Secretary of Education has the ability to waive or modify rules created related to federal student loans to mitigate the effects of a federal emergency, something like a very large global pandemic; COVID-19. The idea is, again, this is the authority that was used in two administrations to pause payments.

This is just literally one more way that the Biden administration is using this authority to make sure that, again, as we step out of these COVID-19 protection programs, that we're creating a safe off-ramp and making sure that we're not just saying, "Okay, we're cutting it off and sending people back into financial distress."

Because we know prior to the pandemic, nearly 8 million people were in default, many people were really in distress on their loans. We know federal student loan borrowers haven't made payments in nearly three years. This is really a way to make sure we're fixing a deeply dysfunctional and broken student loan system but also restarting in a better way. In terms of the court, what's very interesting, though, when we talk about the Heroes Act, for at least the case that came out of the Fifth Circuit that was being heard before the Supreme Court, what's fascinating is before you can even get to the question of the authority and we have to even talk about did these plaintiffs even have standing to bring the suit?

Again, we go back to a lot of this is we're talking a little bit earlier about how ridiculous much of this is, but some of these questions were like, how do we even get here and we haven't even talked about could these plaintiffs even bring this case.

Melissa Harris-Perry: You were there on the steps outside. What were you hearing from people?

Kat Welbeck: One, it was an amazing, incredible day outside of the court, just really seeing student loan borrowers coming from all across the country, meeting people who came all the way from California, people who are from New York, Georgia, North Carolina, people really coming from all of these places to say, "We care about this." Seeing young people, seeing older adults all talking about whether it's their personal stories about student debt, but again, talking about how life-changing this is, and especially when we're talking about-- particularly borrowers of color. When we're talking about Black and Latino borrowers thinking, about how life-changing this plan could be.

For Latino borrowers, nearly 50% of Latino borrowers who have a student loan debt would have their entire balances canceled through this program. Nearly a quarter of Black student loan borrowers who have student loan debt will see their debt canceled through this program. Again, well, many people are questioning the motives of these cases because, again, this is in line with many other ways that the government uses its authority to provide relief. It's also really powerful to see so many student loan borrowers, so many organizations come out and talk about how important this program is, and letting the world know that this is something we care about, telling the administration we're going to keep talking about it until we know that the President is able to deliver on the promise of debt relief.

Melissa Harris-Perry: Kat Welbeck is Director of Advocacy and Civil Rights Counsel at the Student Borrower Protection Center. Kat, as always, thanks for joining us.

Kat Welbeck: Thank you so much for having me. It's a delight.

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