September 30, 2023

Why Biden’s reserve plan could run into trouble again at the Supreme Court

WASHINGTON — President Joe Biden’s backup plan for delivering student debt relief is likely to face legal scrutiny for the same reason his original plan was rejected by the Supreme Court, several experts told USA TODAY, raising questions about the ability of the administration to fulfill its campaign promise without congressional buy-in.

The Supreme Court ruled 6-3 last week that Biden exceeded his authority when he used a 2003 law called the HEROES Act to forgive up to $20,000 in student debt. Hours after the decision was made, the president announced that he would instead seek debt relief under the Higher Education Act of 1965 – an option he described as “legally sound”, but acknowledged that it would likely “take longer” due to the process required to approve it.

The HEROES Act empowered the Secretary of Education to “waiver or change” loan terms, while the Higher Education Act allows the administration to “compromise” loans and forgive them in specific circumstances, such as for borrowers who become teachers . The “compromise” language used to be believed to give the department the power to reduce loans on a case-by-case basis, not necessarily as a general power to forgive debt.

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Given that conservative Supreme Court justices rejected the argument that the word “cancellation” allowed large-scale debt relief, some experts questioned whether a similarly large program would receive support under another law using the word “compromise.” Biden could arguably craft a scarier program that could survive the scrutiny of federal courts but draw political criticism from liberals within his party.

“It’s hard to see why the court would come to a different result in language that is very similar,” Cary Coglianese, a law professor at the University of Pennsylvania, said of a broad debt relief program. “There is nothing in those statutes that prescribes anything of that magnitude, the court said.”

In his announcement last week, Biden carefully articulated the scope of his new proposal. He described it as “the best course left to provide debt relief to as many borrowers as possible”. It’s not clear, specifically, what the administration has in mind. A public meeting on the new effort is scheduled for later this month.

A White House spokesman did not immediately respond to a request for comment.

President Joe Biden is joined by Secretary of Education Miguel Cardona as he announces new actions to protect borrowers after the Supreme Court struck down its student loan forgiveness plan in the Roosevelt Room at the White House on June 30, 2023.

President Joe Biden is joined by Secretary of Education Miguel Cardona as he announces new actions to protect borrowers after the Supreme Court struck down its student loan forgiveness plan in the Roosevelt Room at the White House on June 30, 2023.

The president’s original proposal was to forgive $10,000 for many federal student loan borrowers and up to $20,000 in debt relief for low-income Pell Grant recipients. The debt forgiveness was only available to borrowers with annual incomes less than $125,000 or from households earning $250,000 or less. About 26 million people have applied for the aid, and the government estimated that more than 40 million Americans could qualify.

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Supporters of Biden’s latest effort say the higher education law more clearly spells out the government’s authority to forgive debt. And they note that while the Department of Education has issued rules suggesting assistance should be provided on a case-by-case basis, the provision of the law in question does not contain this restrictive language.

The new law “is largely all about loan balance reduction,” said Persis Yu, deputy executive director of the Student Borrower Protection Center. “Looking at the words of the statute, I think it’s very clear that this would cover the actions that the secretary is considering here.”

Luke Herrine, a law professor at the University of Alabama, acknowledged that “this Supreme Court will view any act of massive debt forgiveness with skepticism.” But he suggested the administration could issue “a narrower version of cancellation” to try and get approval in court.

“Another way it could happen is if the court continues to feel political pressure to bolster its legitimacy,” Herrine said.

‘Who has the authority’ to relieve debt?

The Supreme Court’s conservative majority has become increasingly skeptical of key policies of federal agencies that lack explicit congressional approval. Writing for the majority in the latest student loan case, Chief Justice John Roberts said the language of the HEROES Act about “waiving” loans did not give the Department of Education broad authority to forgive student loans. The Higher Education Act also says nothing about broad forgiveness and, critics say, has never been used that way before.

“The question here is not whether something should be done,” Roberts wrote, “it is who has the authority to do it.”

The Supreme Court relied on similar logic in 2021 to prevent Biden from extending an eviction moratorium related to the COVID-19 pandemic. The court blocked the moratorium, ruling that Congress could not have considered that a public health law it passed to allow the Department of Health and Human Services to handle a pandemic would lead to a nationwide reform of the relationship between landlords and landlords. tenants.

In a high-profile environmental ruling last year, that court’s conservative majority invoked the same theory to invalidate an EPA effort to regulate emissions from power plants that contribute to climate change. Writing for a 6-3 majority, Roberts said the so-called “important questions doctrine” allows courts to strike down rul
es in “extraordinary cases” when they are not explicitly authorized by a law.

“What Congress was most likely thinking about was the secretary’s ability to look at individual borrowers, individual cases … which would allow the secretary to waive student loans,” said Derek Black, a professor of law at the University of South carolina.

If the administration takes a narrower route, Black said, it could very well withstand legal scrutiny.

The Higher Education Act allows certain forms of relief in specific situations, for example, for borrowers who have been defrauded by a college – usually for-profit colleges. Under a settlement reached last year, the Biden administration agreed to pay more than $6 billion in debt relief to 200,000 borrowers in that situation.

“It is difficult for any of us to anticipate whether the government is going to do something within its power or not,” he said. “We just have to wait and see.”

Contributors: Alia Wong, Joey Garrison

This article originally appeared on USA TODAY: Biden’s student debt reserve plan likely to face ‘big’ scrutiny

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