President Biden was wrong, CNN reported in a fact check this week, when he stated that he “signed a law” to forgive student debt after getting it “passed by a vote or two.”
If he had done that, the program would be on firm legal footing and well underway. But what Biden actually did was sign an executive order to forgive federal student loan debt for tens of millions of Americans that he designated as eligible for relief.
Even House Speaker Nancy Pelosi has previously acknowledged that the president does not have the power to forgive student loans.
“That has to be an act of Congress,” she said in July 2021, “the president can’t do it. So that’s not even a discussion.”
It’s a discussion now. On Aug. 24, 2022, the Biden administration announced that it was canceling $10,000 of existing student loan debt for individuals who earn less than $125,000 annually, or $250,000 for a married person filing jointly. For those who had received Pell Grants, which are available to lower-income students, up to $20,000 of debt would be canceled.
The administration is asserting the power to unilaterally spend roughly half a trillion dollars, citing authority under the Higher Education Relief Opportunities for Students (HEROES) Act. That law, intended to ensure that people who served in the military after the 9/11 attacks did not end up worse off financially, allows the government to modify or waive federal student loans during a war or national emergency.
The Biden administration is relying on the “national emergency” language in the HEROES Act to grant loan forgiveness across the board, regardless of whether any individual is better or worse off, because of COVID-19.
As Speaker Pelosi said, the president doesn’t have this power, but it remains an open question whether anyone has legal standing to sue over it. To bring a lawsuit, a person or group must show that particular harm was suffered as a result of the debt cancellation. It’s not enough to be harmed in the same way all other taxpayers are harmed.
That’s what the Wisconsin-based Brown County Taxpayers Association found out when it challenged the program. A federal judge in Green Bay threw out the case for lack of standing. The taxpayer group appealed to the 7th U.S. Circuit Court of Appeals and then to Justice Amy Coney Barrett, who is designated by the Supreme Court to handle emergency matters from Wisconsin. They were turned away by both.
Another lawsuit to stop the debt cancellation program was brought by the states of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. They claim to have standing because some student loans are serviced by state entities that collect revenue from the servicing work, and because some student loans have been bundled into bonds and sold to institutional investors, including some state agencies.
That didn’t convince a U.S. district judge in St. Louis, who threw the case out for lack of standing, but the outcome was different in the 8th Circuit Court of Appeals, which on Friday temporarily blocked the debt cancellation program while the case is appealed.
This issue is much bigger than student debt forgiveness. If a president can’t be stopped from opening the U.S. treasury and handing out billions before an election, this won’t be the last time we see it.
—The Editorial Board, Southern California News Group
