Tto find the authority to cancel billions of dollars in student loans, President Biden turned to two words in a 2003 law: “a national emergency.”
President George W. Bush had troops in Afghanistan and Iraq when Congress passed the Making Higher Education Opportunities for Students Act of 2003. The bill, also known as the HEROES Act of 2003, empowers the Secretary of Education to change the financial aid programs for students during war, military operation or “national emergency”.
Nineteen years later, the Biden administration cited that law this month in announcing a plan to up to $10,000 in student loan debt forgiveness (and $20,000 in education debt for Pell Grant recipients) for those earning less than $125,000. The national emergency it cited was the COVID-19 pandemic and its resulting economic fallout.
This argument is almost certain to be challenged in court. But who can legally challenge the order is unclear. As soon as Biden announced his order, various conservative legal groups began looking into who would have standing to sue, which would require proving they would be harmed by Biden’s order. One possibility: The House could try the order next year if Republicans win enough seats to take control in the fall.
“It’s on shaky legal ground at best,” said Lanae Erickson, senior vice president for social policy, education and policy at Third Way, a Washington think tank that seeks nonpartisan policy solutions. Erickson is concerned that Biden’s action exceeds his reliance on the pandemic’s national emergency and that the courts will rule that such a step requires action by Congress. “I think the connection to the pandemic is quite exaggerated.”
Biden’s order followed his campaign promise to take action to help some of the 44 million Americans with a combined $1.7 trillion in education debt hanging over their heads. Just after taking office last year, Biden himself said he wasn’t sure he could use executive action alone to pay off a large tranche of student debt. “I don’t think I have the authority to do that by signing with a pen,” he said in February 2021.
But after he announced the move to forgive debt on the loan, the administration dismissed doubts about his authority to make such a move. The HEROES Act, White House press secretary Karin Jean-Pierre said on Aug. 25, “authorizes the Secretary of Education to take certain actions that he determines are necessary to ensure that a borrower is not placed in a worse financial position because of national emergency such as the COVID-19 pandemic.”
The federal government temporarily suspended student loan payments at the start of the pandemic. Biden announced last week that the shutdown would end on December 31. The loan forgiveness plan is targeted to take effect the next day.
“Part of what the legal power is used for here, in a targeted way, is to make sure that those borrowers who are most at risk of distress after the restart are the people who will get the relief,” says Bharat Ramamurthy, deputy director of Biden’s National Economic Council.
Since Biden announced the order on Aug. 24, legal groups and experts have speculated about who might be eligible to challenge it. The companies that service the student loans may try to prove that they were harmed. A person making income just above the $125,000 exemption threshold could potentially claim goodwill.
Or one chamber of Congress could try to take the Biden administration to court, arguing that Biden’s loan claim impinges on Congress’s power over the nation’s finances. But such a move could only happen if Republicans win enough seats to take control of the House or Senate.
Such a suit would not be unprecedented. In 2014, the Republican-controlled House voted to impeach the Obama administration on the implementation of the Affordable Care Act. Although House Republicans were eventually granted standing to sue, this case ultimately had little effect on the law’s implementation. In 2019, House Democrats sued the Trump administration over its spending on a border wall.
If Republicans regain control of the House, Minority Leader Kevin McCarthy is the favorite to be the next speaker. McCarthy’s office did not comment Monday on whether House Republicans would sue the Biden administration over the student loan crackdown if they win control of the chamber. If House Republicans were to sue, it might be after the debt relief.
Legal groups are scrutinizing the 25 pages opinion The Justice Department’s Office of the Legal Counsel issued a statement last week telling Biden that he has the authority to reduce or cancel student loan principals for a wide range of borrowers to deal with financial hardships stemming from the pandemic.
“I would expect there would be challenges — it’s such a slap in the face to anybody who did what they had to do,” said Reed Rubinstein, director of oversight and investigations at the America First Legal Foundation, which was founded by Stephen Miller. former senior adviser to former President Donald Trump.
Rubinstein says it’s too early to tell whether his organization, which has challenged numerous Biden administration policies over the past year, will join the challenge of loan forgiveness. He did think that Congress would have the right to sue to protect its institutional interests over the power of the purse.
Rubinstein was an attorney working at the Department of Education during the Trump administration. He says he wrote a memo in January 2021 about loan forgiveness restrictions that Biden’s Justice Department rejected. “The Biden administration and the Democrats had multiple opportunities to address what they felt were injustices in the system or problems with the system the right way through legislation in Congress, but they didn’t do it,” Rubinstein said. “Against that backdrop, it certainly looks like a pretty bare-bones political giveaway of a favorite constituency.”
The Job Creators Network Foundation Legal Action Fund, which successfully sued the 2021 Biden administration over vaccine mandates on behalf of small business owners, is “actively weighing its legal options,” President and CEO Alfredo Ortiz said in a statement .
“A student loan bailout will further exacerbate inflation, increase the deficit and lead to higher taxes,” Ortiz continues. “It’s not fair to the countless numbers of Americans who have paid off their college loans or never went to college, and it doesn’t address the underlying reasons why college loans have become so expensive.”
Adding fuel to the debate over the legality of Biden’s order is a Supreme Court ruling last month involving the so-called fundamental issues doctrine, which says agencies cannot make decisions of national importance without input from Congress. The judges ruled that the Environmental Protection Agency had went too far in regulating emissions from coal and natural gas plants, determining that such sweeping steps require Congress to enact legislation. Erickson believes Biden’s student loan action will face similar criticism.
“I’m very concerned that this will fall into the fundamental issues doctrine,” Erickson says. “The question was whether it has economic and political significance, and I think there’s no way you can say it doesn’t have economic and political significance.”
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