Experts Warn Against Biden Circumventing Supreme Court On Student Debt

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  • The Biden Administration has announced a new effort, the Saving on a Valuable Education (SAVE) Plan, to restructure student debt after the Supreme Court ruled its earlier forgiveness plan effort unlawful.
  • Experts told the Daily Caller News Foundation that the new plan, which would cap repayments, is unlawful and likely to be struck down.
  • “The Biden response to the Supreme Court ruling is both legally defective and fiscally indefensible,” Lance Izumi, Senior Director of the Center for Education at the Pacific Research Institute, told the Daily Caller News Foundation.

The Biden Administration’s new plan to loosen student loan debt repayment terms for millions of borrowers is likely unlawful, legal and education experts told the Daily Caller News Foundation.

The Supreme Court ruled 6-3 on June 30 in Biden v. Nebraska that the administration adopted an unlawfully broad reading of the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 to forgive loans en masse, and that they required Congressional approval to do so. The administration announced a new plan on the day of the ruling that would modify repayment rules and permit new discharges of debt, which experts told the DCNF is unlawful. (RELATED: Here’s How Colleges Could Get Around The Supreme Court’s Affirmative Action Ruling)

The Saving on a Valuable Education (SAVE) plan, which was finalized by the Department of Education (DOE) on June 30, would modify repayment terms for students — capping them at 5% of discretionary income every month for undergraduate borrowers and discharging balances originally $12,000 or less after 10 years, according to a White House press release. The plan, which is formally a regulation that cites authority from the Higher Education Act, “will cut borrowers’ monthly payments in half … [and] save all other borrowers at least $1,000 per year,” the press release reads.

“Now here the Biden administration goes again — trying to create brand new policy through executive action, which, by the way, will add untold billions to the national debt,” Kevin Kosar, a senior fellow at the American Enterprise Institute (AEI) who focuses on the administrative state, told the DCNF.

Legally, “the proposed action amounts to a gross dereliction of duty and is an affront to both representative government and the rule of law,” Kosar said. He also cited a 2021 comment by then-House Speaker Nancy Pelosi that the administration could not unilaterally forgive loans.

“People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress,” Pelosi said.

Pelosi’s comment was also cited by Chief Justice John Roberts in his majority opinion in the case, which was joined by all the court’s conservative justices.

Kosar’s comments were echoed by Lance Izumi, senior director of the Center for Education at the Pacific Research Institute, who told the DCNF the new effort is on “very shaky legal grounds.”

“The administration is trying to push mass loan forgiveness through the rulemaking process at the U.S. Department of Education … [but] the Secretary of Education is limited to just a case-by-case review. So attempt to engage in mass student loan forgiveness through the federal bureaucracy will face a stiff challenge and will likely not survive,” Izumi said, terming the plan “legally defective and fiscally indefensible.”

“Biden has now proposed to do through the Higher Education Act what he tried and failed to do through the HEROES Act,” GianCarlo Canaparo, a senior legal fellow at the Heritage Foundation’s Edwin Meese III Center for Legal and Judicial Studies, told the DCNF. “It doesn’t matter whether the statute is an emergency powers one or a typical delegation … the Supreme Court made clear that it will not tolerate presidents aggressively rewriting statutes to expand their powers without Congressional approval.”

The Biden administration could face a legal challenge against the SAVE plan that is identical to the challenge it faced with its $10,000 cancellation effort. Adam Kissel, a visiting fellow at the Heritage Foundation who served as the deputy assistant secretary for higher education programs in the Trump administration, says that states will have standing to sue and that the outcome will be decided by the major questions doctrine, which dictates that major questions of public policy must be decided by Congress and not the executive branch.

“Missouri and other states with public organizations that service loans will again have standing, even if only a small number of loans are reduced or canceled in violation of the law,” Kissel told the DCNF. He added that “the Department of Education is required to try to collect all debts under the Debt Collection Improvement Act,” which he said the SAVE plan would purportedly violate.

Regarding the cost of the SAVE plan, Izumi noted that it would be “at least $138 billion and could even reach a trillion dollars,” making it approximately as expensive as the original forgiveness plan, which was estimated to cost up to $1 trillion by the Wharton School of the University of Pennsylvania.

The plan will “allow many borrowers to make $0 monthly payments,” according to the White House’s press release. This would “have the effect of subsidizing very expensive programs with very poor outcomes,” Michael Brickman, an adjunct fellow at AEI who worked in the DOE from 2017-2021, told the DCNF.

“Through just about any means they can find, they are trying to forgive as many loans as possible,” Brickman said.

He also noted that the current pause on repayments is costing taxpayers up to “$5 billion per month.”

Brickman told the DCNF that the Biden administration’s conception of college affordability was incorrect.

“The answer is not greater intervention … what’s needed is more of a market-based approach, where students can make informed decisions, and where colleges bear some accountability for students who face poor outcomes from their degrees,” he said.

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

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