WASHINGTON — President Joe Biden’s bailout plan for student debt relief will likely face legal scrutiny for the same reason his original plan was overturned by the Supreme Court, multiple experts told USA TODAY, raising questions about the administration’s ability to deliver on its campaign pledge 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 cancel up to $20,000 in student debt. Hours after the decision was passed, the president announced he would instead seek debt relief under the Higher Education Act of 1965 – an option he described as “legally sound” but said acknowledged that it would “probably take longer” due to the process required to pass it.
The HEROES Act empowered the Secretary of Education to “waive or vary” loan terms while the Higher Education Act allows the administration to “compromise” loans and forgive them in specific circumstances, as for borrowers who become teachers. The language of “compromise” was previously understood to give the ministry authority to reduce loans on a case-by-case basis, not necessarily as general authority to cancel debt.
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Since conservative Supreme Court justices rejected the argument that the word “waiver” allowed for comprehensive debt relief, some experts have questioned whether such a broad program would win support under a different law. who uses the word “compromise”. Biden could arguably craft a narrower agenda that might survive federal court scrutiny but could draw political criticism from liberals within his party.
“It’s hard to see why the court would come to a different result in very similar language,” University of Pennsylvania law professor Cary Coglianese said of a massive debt relief program. “There is nothing in these statutes that contemplates anything of this size, the court found.”
In his announcement last week, Biden carefully framed the scope of his new proposal. He described it as “the best avenue left to provide as many borrowers as possible with debt relief”. It’s unclear exactly what the administration has in mind. A public meeting on the new effort has been set for later this month.
A White House spokesperson did not immediately respond to a request for comment.
The president’s original proposal sought to cancel $10,000 for many federal borrowers and up to $20,000 in debt relief for low-income Pell Grant recipients. Debt cancellation was only available to borrowers with annual incomes of less than $125,000 or households earning $250,000 or less. Some 26 million people have applied for the aid, and the administration has estimated that more than 40 million Americans could be eligible.
Counter-argument: Lawyers say new law is clearer
Supporters of Biden’s latest effort say the Higher Education Act more clearly spells out the administration’s power to cancel debt. And they note that although the Department of Education has developed regulations suggesting that remedies should be granted on a case-by-case basis, the provision of the law at issue does not include this limiting language.
The new law “is all about reducing the loan balance,” said Persis Yu, deputy executive director of the Student Borrower Protection Center. “Looking at the words of the act, I think it’s very clear that it would cover the actions the secretary is considering here.”
Luke Herrine, a law professor at the University of Alabama, acknowledged that “this Supreme Court will view with skepticism any act of massive debt cancellation.” But he suggested the administration could adopt “a narrower version of nullification” in an attempt to gain court approval.
“Another way this could happen is if the court continues to feel political pressure to bolster its legitimacy,” Herrine said.
“Who has the power” to provide debt relief?
The conservative majority on the Supreme Court has become increasingly skeptical of major policies by federal agencies that lack explicit congressional approval. Writing for the majority in the latest student loan case, Chief Justice John Roberts said the HEROES Act’s wording on “forgiveness” of loans does not give the Department of Education broad authority to forgive loans students. The Higher Education Act, similarly, says nothing about broad forgiveness and, according to critics, it has never been used in this way before.
“The question here is not whether something should be done,” Roberts wrote, “it is who has the power to do it.”
The Supreme Court relied on similar logic in 2021 to block Biden from extending a moratorium on evictions tied to the COVID-19 pandemic. The court blocked the moratorium, ruling that Congress could not have contemplated that a public health law it approved to empower the Department of Health and Human Services to deal with a pandemic would lead to a nationwide overhaul of the relationship between landlords and tenants.
In a high-profile environmental ruling last year, the court’s conservative majority invoked the same theory to strike down an EPA effort to regulate power plant emissions that contribute to climate change. Writing for a 6-3 majority, Roberts said the so-called “major issues doctrine” allows courts to strike down settlements in “extraordinary cases” when not explicitly authorized by statute.
“What Congress was most likely considering was the Secretary’s ability to review individual borrowers, individual cases … that would allow the Secretary to waive student loans,” said Derek Black, a law professor at the University of Caroline from the south.
If the administration takes a narrower course, Black said, it may well withstand legal scrutiny.
The Higher Education Act allows for some forms of relief in specific situations, such as for borrowers who have been defrauded by a college – usually for-profit colleges. As part of a deal reached last year, the Biden administration agreed to pay 200,000 borrowers in this 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 will be within their power or not,” he said. “We just have to wait and see.”
Contributor: Alia Wong, Joey Garrison
This article originally appeared on USA TODAY: Biden’s student debt bailout plan likely faces ‘major’ scrutiny