Student debt: Why Biden's backup plan may wind up in trouble again at the Supreme Court

WASHINGTON – President Joe Biden's backup plan for delivering student debt relief will likely face legal scrutiny for the same reason his initial plan was knocked down by the Supreme Court, several experts told USA TODAY, raising questions about the administration's ability to deliver on his campaign pledge without buy-in from Congress.

The Supreme Court ruled 6-3 last week that Biden overstepped 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 landed, the president announced he would instead pursue debt relief under the Higher Education Act of 1965 − an option he described as "legally sound" but acknowledged would likely "take longer" because of the process required to adopt it.

The HEROES Act empowered the secretary of education to "waive or modify" loan terms while the Higher Education Act permits the administration to "compromise" loans and forgive them in specific circumstances, such as for borrowers who become teachers. The "compromise" language has previously been understood to give the department power to reduce loans on a case-by-case basis, not necessarily as a blanket authority to forgive debt.

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Given that the Supreme Court's conservative justices smacked down the argument that the word "waive" allowed wholesale debt relief, some experts questioned whether a similarly sweeping program would win support under a different law that uses the word "compromise." Biden could arguably craft a narrower program that might survive scrutiny from federal courts but that might draw political criticism from liberals within his party.

"It's hard to see why the court would reach a different result under language that's very similar," Cary Coglianese, a law professor at the University of Pennsylvania, said of a broad debt relief program. "There's nothing in those statutes that contemplates something of that size, according to the court."

In his announcement last week, Biden carefully worded the scope of his new proposal. He described it as "the best path that remains to providing for as many borrowers as possible with debt relief." It's not clear, specifically, what the administration has in mind. A public meeting on the new effort has been set for later this month.

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

The president's original proposal sought 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 cancellation was only available to borrowers with annual incomes less than $125,000 or from households earning $250,000 or less. Some 26 million people applied for the relief and the administration estimated more than 40 million Americans might qualify.

Counterargument: Advocates say the new law is clearer

Supporters of Biden's latest effort say the Higher Education Act more clearly lays out the administration's power to forgive debt. And they note that while the Education Department has crafted regulations that suggest relief should be provided on a case-by-case basis, the provision of the law at issue doesn't include that limiting language.

The new law, "very much is entirely about the reduction in loan balance," said Persis Yu, deputy executive director at the Student Borrower Protection Center. "Looking at the words of the statute, I think it is very clear that this would cover the actions that the secretary is contemplating here."

Luke Herrine, a law professor at the University of Alabama, acknowledged that "this Supreme Court will view any act of mass debt cancellation skeptically." But he suggested that the administration could enact "a narrower version of cancellation" to try to win approval in court.

"Another way it could happen is if the court continues to feel political pressure to shore up its legitimacy," Herrine said.

'Who has the authority' to relieve debt?

The Supreme Court's conservative majority has grown increasingly skeptical of significant policies from federal agencies that do not have explicit approval from Congress. Writing for the majority in the latest student loans case, Chief Justice John Roberts said that the HEROES Act's language about "waiving" loans didn't give the Department of Education broad authority to forgive students loans. The Higher Education Act, similarly, doesn't say anything about broad forgiveness and, critics said, it 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 tied to the COVID-19 pandemic. The court blocked the moratorium, ruling that Congress couldn't have contemplated that a public health law it approved to empower the Department of Health and Human Services to address a pandemic would lead to a nationwide reshaping of the relationship between landlords and tenants.

In a high-profile environmental ruling last year that court’s conservative majority invoked the same theory to invalidate an  Environmental Protection Agency effort to regulate power plant emissions that contribute to climate change. Writing for a 6-3 majority, Roberts said the so-called "major questions doctrine" allows courts to strike down regulations in "extraordinary cases" when they are not explicitly permitted by law.

"What Congress was most likely contemplating was the secretary's ability to look at individual borrowers, individual instances...that would allow the secretary to waive student loans," said Derek Black, a law professor at the University of South Carolina.

If the administration takes a narrower route, Black said, that may well withstand legal scrutiny.

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

"It's hard for any of us to prejudge whether the administration is going to do something that’s going to fall within its power or not," he said. "We just have to wait and see."

Contributing: Alia Wong, Joey Garrison

This article originally appeared on USA TODAY: Biden's backup student debt plan likely faces 'major' scrutiny