US President Joe Biden announces his plan to forgive some student loan debt in the Roosevelt Room of the White House on Wednesday August 24, 2022. Credit - Demetrius Freeman—The Washington Post via Getty Images
To find the authority to cancel billions of dollars in student loans, President Biden turned to two words in a 2003 law: “national emergency.”
President George W. Bush had troops in Afghanistan and Iraq when Congress passed the Higher Education Relief Opportunities for Students Act of 2003. The bill, also known as the HEROES Act of 2003, gives the Secretary of Education authority to change student financial assistance programs during a war, military operation, or “national emergency.”
Nineteen years later, the Biden administration cited that law this month in announcing a plan to forgive up to $10,000 of student loan debt (and $20,000 of education debt for Pell Grant recipients) for those earning less than $125,000. The national emergency it cited was the COVID-19 pandemic and economic fallout stemming from it.
That reasoning 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 exploring who would have legal standing to sue, which would require proving they would be harmed by Biden’s order. One possibility: the House could sue over the order next year, if Republicans win enough seats to take control in the fall.
“It’s on shaky legal ground at best,” says Lanae Erickson, the senior vice president for social policy, education and politics at Third Way, a Washington think tank that looks for non-partisan policy solutions. Erickson is concerned that Biden’s action overreaches in its reliance on the national emergency of the pandemic and that the courts will determine such a step requires congressional action. “The connection to the pandemic is pretty exaggerated, I think.”
Biden’s order followed his promise on the campaign trail to take action to help some of the 44 million Americans with a collective $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 forgive a large tranche of student debt like $50,000 per borrower. “I don’t think I have the authority to do it by signing with a pen,” he said in February 2021.
But since he announced the loan debt forgiveness actions, the administration has rejected doubts about his authority to act. The HEROES Act, White House Press Secretary Karine Jean-Pierre said on Aug. 25, “authorizes the Secretary of Education to take certain actions he believes they are necessary to ensure a borrower is not placed in a worse position financially due to a national emergency like the COVID-19 pandemic.”
The federal government temporarily suspended student loan payments early on in the pandemic. Biden announced last week that the suspension would end on Dec. 31. The loan forgiveness plan is targeted to go into effect the next day.
“Part of what the legal authority is being used to do here, in a targeted way, is to make sure that those borrowers who are at highest risk of distress after the restart happens, those are the people who are going to get the relief,” says Bharat Ramamurti, the deputy director of Biden’s National Economic Council.
Since Biden announced the order on Aug. 24, legal groups and experts have speculated on who might have standing to challenge it. Companies that service the student loans may attempt to prove they’ve been harmed. A person who makes an income just over the $125,000 threshold for forgiveness could potentially claim to have standing.
Or one of the chambers of Congress could try to take the Biden Administration to court, arguing that Biden’s loan action steps on congressional power over the nation’s finances. But such a move could only happen if Republicans won 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 sue the Obama administration over its application of the Affordable Care Act. Though House Republicans were ultimately granted standing to sue, that lawsuit ended up having little effect on the implementation of the law. In 2019, House Democrats sued the Trump administration over its spending on building a border wall.
If Republicans take back control of the House, Minority Leader Keven McCarthy is the frontrunner to be the next Speaker. McCarthy’s office would not comment on Monday on whether House Republicans would sue the Biden Administration over the student loan action if they gained control of the chamber. If House Republicans were to sue, it may be after the debt had been forgiven.
Legal groups are closely studying the 25-page opinion the Department of Justice’s Office of Legal Counsel released last week telling Biden he had the authority to reduce or cancel principal balances of student loans for a broad class of borrowers in order to address the financial hardship arising out of the pandemic.
“I would expect there would be challenges—this is such a slap in the face to everybody who did what they were supposed to do,” says Reed Rubinstein, the director of oversight and investigations for the America First Legal Foundation, which was founded by Stephen Miller, a former senior adviser to former President Donald Trump.
Rubinstein says that it is too early to know if his organization, which has challenged multiple Biden administration policies, would get involved in challenging the loan forgiveness. He did think that Congress would have standing to bring a case to protect its institutional interests over the power of the purse.
Rubinstein was a lawyer working at the Department of Education during the Trump Administration. He says he wrote a memo in January 2021 about the limits of loan forgiveness that Biden’s Justice Department dismissed. “The Biden administration and the Democrats have had multiple opportunities to address what they perceive to be inequities in the system or problems with the system, the proper way through legislation in Congress, and they haven’t done it,” Rubinstein says. “Within that backdrop it sure looks like a pretty nakedly political giveaway to a favorite constituency.”
The Job Creators Network Foundation Legal Action Fund, which successfully sued the Biden administration in 2021 over vaccine mandates on behalf of small business owners, is “actively weighing its legal options,” says President and CEO Alfredo Ortiz 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 untold number of Americans who paid back their college loans or never went to college and it doesn’t address the root causes of why college loans have become so expensive.”
Adding fuel to the debate over the legality of Biden’s order is a Supreme Court decision last month involving the so-called major questions doctrine, which says that agencies can’t make decisions of national significance without congressional input. The justices ruled that the Environmental Protection Agency had gone too far in regulating coal and natural gas plant emissions, determining that such sweeping steps require Congress to pass a law. Erickson believes Biden’s student loan action will face a similar rebuke.
“I’m very concerned this is going to fall under the major questions doctrine,” Erickson says. “The question there was whether it has economic and political significance and I think there is no way that you can say this does not have economic and political significance.”