Student Loan Forgiveness Needs Congressional Authorization, Supreme Court Rules

On June 30, the U.S. Supreme Court ruled that Biden’s Department of Education cannot unilaterally forgive student debt. Though the three dissenting justices tried to argue that a post-9/11 law, the HEROES Act, authorized the bonanza, it was an impossible task, as even liberal commentators agreed the program was unlawful from the start.

The post-decision headlines were predictably hyperbolic. One called the decision “completely partisan” and “an exercise of raw power.” Another announced the decision “will exacerbate racial inequality.” These headlines wildly miss the mark. This was a case about basic separation of powers principles, and nothing more.

Turns out that the HEROES Act only permits the government to “waive or modify” student loan provisions (and only in certain specific instances). As the Court noted, “waive or modify” does not mean the government can “rewrite” student loan programs “from the ground up.” The word “modify” means making modest changes, such as extending the time a borrower has to fill out paperwork. And “waive” refers to waiving a specific law. Here, the Biden administration could not identify any law he was actually waiving. 

The Court also invoked common sense. Even if a slick lawyer could argue that the quiet little 2003 law secretly contained Biden’s 2020 half-trillion-dollar campaign promise, words must be read in context. That means the executive branch may not exercise unheralded power of staggering economic and political significance without clear Congressional authorization. With respect to the HEROES Act, Congress gave no indication that it was giving the executive branch the power to forgive student loans. The HEROES Act has allowed the government to pause loan payments for students who postpone their studies to serve in the military. But the interest has always accumulated during this time. Debt forgiveness was never part of the deal.

This principle, that Congress does not hand over enormous power accidentally, is a major theme of the case. Congress introduced more than 80 student loan forgiveness bills just in the last Congress. None made it to the floor. By stopping the administration from seizing power from the legislative branch and making that decision unilaterally, the Court preserved congressional power consistent with our constitutional structure. 

The illegality of Biden’s program was glaring and obvious to all. As even former Speaker of the House Nancy Pelosi (D-NY) said, “He does not have that power.”

The only real question was whether anyone had the legal authority to sue. Federal courts only open their doors to plaintiffs who have been concretely injured. When the federal government blows out spending, even if illegally, who is made worse off? If the answer is, “All of us taxpayers!” that’s (sadly) not enough to establish standing to bring a lawsuit.

Here, the Court held, the state of Missouri was injured because a loan-servicing corporation created by, for, and answerable to the state would lose out on tens of millions of fees. That cut to revenue would impair the state corporation’s “efforts to aid Missouri college students.” That harm “in the performance of its public function is necessarily a direct injury to Missouri itself.”

The Supreme Court’s ruling appears not to faze President Biden, who campaigned on forgiving student loans to court younger, educated, Democratic voters. In fact, the President is doubling down with an equally illegal Plan B. A certain past President would have been called a threat to democracy for this total disregard for the rule of law. And Plan B will be struck down soon enough.

The debt issue in America is certainly real. One in five adults has student loan debt, at an average load of $58,000 per household. Not only that, but the average household (with the following types of debt) has $14,000 in credit card debt, $31,000 in auto loan debt, and $202,000 in mortgage loans. It seems like Biden thinks forgiving the college-kid portion is the way to go. But he’s going to need to win some down-ballot races. Because the Supreme Court made one thing clear: that decision is for Congress.