Supreme Court May Crush Biden’s Student Loan Bailout Dreams

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Alexa Schwerha Contributor
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  • The United States Supreme Court will hear two arguments against President Joe Biden’s student loan cancelation plan on Tuesday.
  • The Biden administration’s plan would cancel up to $20,000 for student loan borrowers who received a Pell grant and $10,000 for those who did not.
  • “The Biden administration’s plan to cancel student debt is unprecedented,” Defense for Freedom Institute President and Co-Founder Bob Eitel told the Daily Caller News Foundation.

The United States Supreme Court could put an end to President Joe Biden’s plan to cancel a portion of Americans’ student loans after the Supreme Court hears oral arguments Tuesday, legal and educational experts told the Daily Caller News Foundation.

Biden announced in August that $20,000 of student loan debt would be forgiven to borrowers who received Pell Grants and $10,000 for borrowers who did not, but the plan was put on ice in November after a federal judge in Texas ruled that the plan was an “unconstitutional exercise of Congress’s legislative power.” The Supreme Court agreed in December to hear two challenges to the cancellation plan — one from a pair of borrowers and another from a coalition of states that allege Biden’s plan infringes on state rights. (RELATED: The Biden Admin’s Student Loan Repayment Pause Could Cost Almost $300 Billion, Experts Say)

The Biden Administration relied on the Higher Education Relief Opportunities for Students (HEROES) Act to push the plan forward without Congressional approval since the act grants the Department of Education (DOE) secretary the authority to cancel or modify student loans in the case of a federal emergency, AP reported. The administration argues that student loan borrowers were impacted by the COVID-19 pandemic, which former President Donald Trump classified as a national emergency.

“Having taken a long look at this, I’m of the view that the HEROES act doesn’t provide the authority that the administration claims it does,” Jack Fitzhenry, senior legal policy analyst at Heritage Foundation, told the DCNF.

Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina brought a case against the Biden administration’s plan in September in which they argue that it overstepped its statutory authority. The lawsuit was dismissed by a lower court, but the Supreme Court agreed to hear the case after the U.S. Court of Appeals for the 8th Circuit issued an injunction, according to AP.

“The court has taken a skeptical view of sweeping executive actions based on flimsy statutory justifications. Last term, the Court made clear in West Virginia v. EPA that, when the executive branch claims sweeping new powers, its actions must be supported by clear congressional authorization,” Michael Poon, a Pacific Legal Foundation attorney, told the DCNF. “I expect the argument will center on whether Congress clearly gave the President the power to unilaterally wipe away half a trillion dollars in student loan debt in the HEROES Act.”

The Supreme Court ruled 6-3 in West Virginia v. EPA that the Environmental Protection Agency did not have the authority to set greenhouse gas emissions caps without congressional authority, according to the court documents.

Myra Brown and Alexander Taylor, both student loan borrowers, sued because they allege Biden did not pursue proper procedures to enact the plan, AP reported. Brown was not eligible for the program since her loans were commercial while Taylor did not qualify for the full $20,000 since he did not receive a Pell grant.

“The separation of powers in the Constitution gives Congress alone the power to make law. The critical flaw in the Administration’s plan is that it was done without Congress,” Poon said. “There are many policy proposals to address the student loan issue; but they all require Congress to act. If the President wants to help people with student loans, he should focus on reducing regulatory burdens and increasing economic opportunity.”

WASHINGTON, DC – JANUARY 02: Student loan borrowers gathered at the Supreme Court today to tell the court that student loan relief is legal on January 02, 2023 in Washington, DC. (Photo by Larry French/Getty Images for We, The 45 Million)

The Biden administration’s plan is expected to cost taxpayers more than $400 billion, the Congressional Budget Office estimated.

“The Biden administration’s plan to cancel student debt is unprecedented,” Defense of Freedom Institute President and Co-Founder Bob Eitel told the DCNF. “Should the Supreme Court allow this $400 billion boondoggle to go forward, it would authorize such an extreme expansion of presidential power that it would grossly undermine the authority of Congress to make spending decisions granted by the Constitution.”

The DOE is currently toying with a plan to reduce monthly student loan repayments by adjusting the amount owed to a borrower’s income. The proposal, announced in January and currently receiving public comments, would amend the Revised Pay As You Earn (REPAYE) plan so that individual borrowers who learn less than $36,000 per year and borrowers with a family of four who earn less than $62,400 per year could choose a $0 monthly plan, while borrowers who do not qualify can cut their monthly total in half.

The administration said its income-driven repayment plan would cost $138 billion, but a Committee for a Responsible Federal Budget report alleges the actual number could be double.

“This administration has looked for every opportunity, legal or not, to forgive student loans. The mass forgiveness program is just the tip of the iceberg,” Eitel told the DCNF. “The next of this administration’s taxpayer-funded giveaways is the proposed revamp of Income-Driven Repayment on student loans, which could cost taxpayers over $1 trillion. That rule is expected by November of this year.”

Fitzhenry warned that allotting expansive “executive authority” can be used by future administrations to skirt legislative cooperation.

“Whatever people may think of the particulars of our student loan system and the student loan debt, we have to be mindful of the kind of powers that are being invoked to deal with these problems because those indications provide precedent for future actions that you may not like,” he told the DCNF. “That’s something I would caution people to be aware of as they’re awaiting a decision on this case.”

The DOE did not immediately respond to the DCNF’s request for comment.

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