SEARCH TODAY'S NEWS ARCHIVES

Federal Judge Strikes Down Biden's Debt Cancellation Plan

By Hugh T. Ferguson, NASFAA Senior Staff Reporter

A federal judge on Thursday struck down President Joe Biden's student loan debt cancellation program, declaring the action an "unconstitutional exercise of Congress's legislative power."

The ruling, coming from a court case in Texas, further complicates the administration's efforts to implement the program — which late last month was stalled by a legal injunction that has halted borrowers from having their applications processed and receiving debt cancellation.

Education Secretary Miguel Cardona said in a statement on Friday that the administration was "disappointed" in the ruling, and that the Department of Justice had already appealed the decision. He also noted that more than 26 million borrowers had already applied for relief, and more than half of those applications have already been approved and sent to loan servicers "to be discharged when allowed by the courts."

"We believe strongly that the Biden-Harris Student Debt Relief Plan is lawful and necessary to give borrowers and working families breathing room as they recover from the pandemic and to ensure they succeed when repayment restarts," Cardona said. "Separately, we remain committed to taking other actions to fix longstanding issues in the student loan forgiveness system and hold schools accountable for leaving students with mountains of debt and without the skills and preparation to find good jobs."

This latest case comes from two borrowers who, according to the legal filing, disagree with the administration's eligibility criteria. One borrower did not qualify for the program due to their loans being commercially held while the second borrower was ineligible for the full $20,000 in cancellation because they never received a Pell Grant.

The plaintiffs in the Texas case allege that the program violates the Administrative Procedure Act's notice-and-comment requirements, and that the secretary lacks the authority to implement the program.

While other cases have been unable to garner legal standing to bring a case against the administration, the federal judge outlined how these borrowers could be harmed by the administration's actions.

"Plaintiffs have a concrete interest in having their debts forgiven to a greater degree," Judge Mark Pittman of the Northern District of Texas wrote. "[The plaintiff's] inability to obtain the full benefit of debt forgiveness under the Program flows directly from the Program's eligibility requirements. Thus, Defendants' procedural error of not providing for a notice-and-comment period—which the Court must assume as true for standing—deprived Plaintiffs of ‘a non-illusory opportunity to pursue [the] benefit' of greater debt forgiveness and an opportunity to advocate for the expansion of the eligibility criteria of the Program."

Pittman also argued that it was not the court's role to determine whether the program constitutes good public policy and that it instead requires congressional authorization, even citing Speaker Nancy Pelosi's (D-Calif.) previous remarks that the president lacked the authority to implement such a program.

"In this country, we are not ruled by an all-powerful executive with a pen and a phone," the judge wrote in his ruling. "Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government."

Rep. Virginia Foxx (R-N.C.), ranking member of the House Committee on Education and Labor, applauded the decision and said that "hardworking taxpayers across the country are rightfully rejoicing."

"This administration continues to operate as if its own self-appointed authority in transferring billions of dollars in student loans is legitimate, but the rule of law says otherwise," Foxx said. "This radical scheme must be eviscerated entirely, and Republicans will continue to support legal challenges to achieve that end."

 

Publication Date: 11/11/2022


James C | 11/14/2022 12:0:14 PM

I said from the beginning that Biden could have used the pandemic emergency to partially forgive debt that was disbursed during the covid emergency. To use the pandemic as a reason to forgive debt from prior to the emergency is a stretch of executive authority. I hope Congress reforms how students pay back their federal loans and it would be great if they would include some forgiveness even some interest forgiveness but I don't see that as likely.

David S | 11/14/2022 10:26:05 AM

Darren C - this is 100% a political issue, especially the legal challenges to it. If I'm seeing a political argument being made, my politically charged response is simply sticking to the matter at hand.

Jackie, I think you misread what I wrote. I was criticizing Rep Foxx for assuming that those with student loan debt do not work hard or pay taxes. I've been working in financial aid for 38 years; if I thought that needy students don't work hard, that would have been a very odd career choice to make.

Jackie K | 11/14/2022 10:3:18 AM

David S - This could not be further from the truth. I have worked extremely hard since I was sixteen years old and I assure you that I pay my taxes each and every year. I did not take student loans out until I was working on my Bachelor's of Arts and Master's degree and then only took what I absolutely needed. However, no matter how much I have paid toward the loan balance, the loans never seem to go down due to the accrued interest which continues to accumulate. But thank you for placing all student loan borrowers in the same bucket without researching what you are referring too.

Darren C | 11/14/2022 9:7:37 AM

Instead of focusing on specifically divisive statements that go along party lines, it’s much more effective to have conversation around the big picture. It’s no surprise that there would be legal challenges to an unprecedented use of executive authority surrounding the unaddressed mess of education debt. Not to mention that it was very rushed out around the mid-term elections. Also, what’s the long-term plan for student loan repayment resumption in 45 days?
Encouraging people to apply, assuring them that it would go through before the legal process had fully played out was irresponsible at best. Most student loan borrowers don’t pay attention to what’s happening behind the scenes and just believe that their debt will be forgiven. There is over 1.6 trillion is educational debt in this country and not one long term solution to fixing the bloated overall cost of education in this country has been brought to the table (More Pell is not a solution). Why it should ever cost hundreds of thousands of dollars in some instances to get a bachelor’s degree in this country is beyond me.
The bottom line is that making taxpayer debt disappear is not a solution. It felt like a quick fix in the moment to give people the illusion of solving a problem. The last year or so there has been a concerted focus to find ways of forgiving education debt. The student loan system however in and of itself has not universally changed. Which would lead one believe the same catastrophic problems will appear repeatedly.

David S | 11/14/2022 8:43:01 AM

The comment from the potential chair of the House Committee on Education and Labor that "hardworking taxpayers across the country are rightfully rejoicing" seems to presume that those who benefit from and/or support student loan forgiveness are neither hardworking nor taxpayers.

Quite a statement from someone who was once a college president. But very consistent for the party whose last Secretary of Education said goodbye to our profession by saying "the 2/3 of Americans who don't go to college shouldn't have to pay for the 1/3 who do."

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.

Related Content

Education Secretary Cardona Warns Against Complacency in FSA Conference Keynote

MORE | ADD TO FAVORITES

Today's News for December 1, 2022

MORE | ADD TO FAVORITES

VIEW ALL
View Desktop Version