An unconstitutional and unjust policy

Late last Friday, the Eighth Circuit Court of Appeals halted the Biden administration's student loan forgiveness program. The federal court issued an order prohibiting the administration from "discharging any student loan debt"—something the administration had said it would do starting this past Sunday—until the court had an opportunity to evaluate a lawsuit challenging the program. This is good news for the rule of law.

The Biden administration’s student loan forgiveness program is unwise policy. It is regressive. It leaves out the working class and benefits Americans who are relatively well off. Under the administration’s plan, a couple making just under $250,000 can obtain as much as $40,000 in loan forgiveness. Those who could not afford college, or chose not to attend college, are left out and indeed may be forced to bear the cost of additional taxes. So too for students who worked through college, chose to attend less expensive institutions, or saved for college and did not borrow. Families who saved and sacrificed to send their children to school are, in effect, penalized for their planning and stewardship. As Elizabeth Warren famously told one father who inquired as to whether his family would get a refund, "Of course not."

Even prominent Democrats came out against the administration’s unilateral action. Tim Ryan, the Ohio representative running for the Senate, said widespread student loan relief sends the "wrong message" to struggling Americans. Another Democratic candidate for Congress characterized Biden's plan as being "out of step with the needs and values of working-class Americans." And Rep. Chris Pappas noted that the administration’s action improperly “sidesteps" Congress: “Any plan to address student debt should go through the legislative process.”

The loan forgiveness program is not just unwise. It is also illegal.

Up until August of 2022, Republicans and Democrats agreed that wide-scale student loan relief would need to be undertaken by Congress, not by unilateral executive action. As Speaker Pelosi explained in July of 2021, the president does not have the unilateral power to forgive student loan debt, such an action requires an act of Congress. And of course, the Democrat-led Congress had every opportunity to pass President Biden's plan but refused to do so.

Under our constitutional system, the Executive does not have the power of the purse. That is given to Congress. And yet the Biden administration's plan comes with an estimated price tag of at least $500,000,000,000.

With that many zeroes, the administration’s student debt program should trigger close constitutional review under the major questions doctrine, which the Supreme Court has recently used to pump the brakes on eyebrow raising executive action. Under the doctrine, the Court presumes that Congress intends to make major policy decisions itself, not leave those decisions to unaccountable agencies. This means that when an administrative agency claims authority to decide a significant economic question, it must point to a statute that delegates that authority to the agency.

So, did Congress authorize blanket loan forgiveness? In a word, no. Not at all.

The administration claims authority for the loan forgiveness program under the HEROES Act, a statute designed to aid military families with educational debt occasioned by war or national emergencies. So, while President Biden says the pandemic is over, the administration also says that the pandemic constitutes a national emergency under the HEROES Act.

In addition to trying to have it both ways, the administration’s reliance on the HEROES Act is misplaced. That statute provides case-by-case relief—it does not authorize blanket loan forgiveness for some 40 million relatively well-off Americans. Even the president’s own lawyers in the Office of Legal Counsel acknowledge that the statute limits relief to “affected individuals,” defined as someone who has “suffered direct economic hardship as a direct result of a war or other military operation or national emergency.”

This is not the first time the administration has used the COVID-19 pandemic as an excuse to rule by executive fiat. The administration sought to impose a nationwide eviction moratorium through an unlikely agency: the Centers for Disease Control. As the Supreme Court said in striking down the moratorium, the CDC’s authority to prevent the spread of disease was a wafer-thin reed on which to claim the power to impose a national moratorium on evictions. Similarly, the Supreme Court rejected the Occupational Safety and Health Administration’s vaccinate-or-test mandate on some 84 million Americans.

The administration’s student loan program should fare no better. Rule by executive fiat is inconsistent with our Constitution. Our Founders separated governmental powers precisely so that one branch of government could not act unilaterally. Regardless of what one thinks about student loan relief, that question should be decided by Congress and not by an administrative agency.