Experts Divided on Biden’s New Student Loan Forgiveness Plan

President Joe Biden
by Bridget McCaughey


President Joe Biden’s new student loan forgiveness plan has legal experts divided, with some citing similar problems to his previous plan struck down by the U.S. Supreme Court.

The Biden administration’s Saving on a Valuable Education Plan is an income-based student loan repayment plan that provides full loan forgiveness in certain cases.

For example, the plan gives “borrowers who originally borrowed $12,000 or less forgiveness after as few as 10 years,” according to the Federal Student Aid website.

However, Kansas and 10 other states recently filed a lawsuit challenging SAVE, saying the Department of Education does not have the authority to alter or cancel student loan repayment plans. A group of state attorneys general also filed a second lawsuit.

Sheng Li, litigation counsel at New Civil Liberties Alliance, a nonprofit law firm dedicated to fighting unlawful administrative power, told The College Fix the plan is based on a misinterpretation of the Higher Education Act.

“The president has interpreted the 1993 statute’s grant of authority to create plans that provide for repayment of loans to mean he can create plans that provide for the total cancellation of loans. He is wrong,” Li said in a recent email.

Li said Biden’s previous student loan forgiveness plan, which the Supreme Court struck down in Biden v. Nebraska, had a similar problem.

In that case, the plan “attempted to cancel up to $20,000 of loans for 40 million borrowers immediately,” he told The Fix.

While the SAVE Plan “does not generally provide for immediate cancellation,” Li said it “significantly reduces a participating borrowers’ monthly payments, down to zero for many borrowers.”

Then, “after 20 years of making very low or zero payments, participating borrowers will have their loans canceled, which obviously results in significantly more cancellation than if they had been making regular monthly payments that whole time,” he said.

He said the plan is estimated to cost “$475 billion over a ten-year period.”

However, Kate Elengold, an assistant professor at the University of North Carolina School of Law, said the SAVE Plan is within the authority of the Department of Education.

She signed an amicus curiae opinion to the Supreme Court in support of Biden’s initial plan.

“The Higher Education Act gives the Department of Education the authority to issue regulations to implement the goals of the statute,” including “income-driven repayment plans,” she told The Fix in a recent email.

Elengold said the SAVE plan “simply changes the terms of existing income-driven repayment plans to make repayment more streamlined and affordable for student borrowers.”

Additionally, the Biden administration went through the traditional administrative process for regulations with the new plan, she told The Fix.

In contrast, she said Biden’s earlier plan, based on an interpretation of the HEROES Act, “was not an income-driven repayment plan” and did not go through the full regulatory process.

Elengold said, “In Biden v. Nebraska, the Court found that the HEROES Act did not give the Secretary of Education the authority to enact the original student loan cancellation plan. Because the newly-unveiled plan arises under different authority and has a narrower scope, the Court will need to take a new look at its constitutionality.”

She said the Biden Administration has taken steps to deal with these problems, including the creation of a new, narrower loan forgiveness plan, introduced in April.

But Li disagreed, telling The Fix, “The Biden Administration has not done anything to rectify the problems that caused the U.S. Supreme Court to rule against Biden in Biden v. Nebraska.”

Both plans wrongly rely on “vague language in an old statute” to “‘discover’ new authority to cancel billions of dollars in student loans,” Li told The Fix.

Ilya Somin, a law professor at George Mason University, expressed similar concerns, saying Biden’s new and old plans have “many parallels.”

In a recent article at Reason, Somin wrote:

Both involve efforts to forgive large amounts of student debt by exploiting vaguely worded statutes. Both plans are vulnerable under the “major questions doctrine,” which requires Congress to “speak clearly” when authorizing an executive branch agency to make “decisions of vast economic and political significance.” And both cases involve similar procedural “standing” questions.

Li told The Fix it’s too early to predict if the Supreme Court will hear Kansas’s lawsuit.

But, depending on how lower courts rule, he told The Fix he suspects the high court may be “interested in reviewing the legality of a half-trillion-dollar spending program that the president unilaterally enacts without seeking Congressional approval.”

The Fix also contacted several other law professors who supported the government’s case in Biden v. Nebraska, including Chapman University’s Kurt Eggert, University of California at Irvine’s Dalié Jiménez, and University of California Berkeley School of Law Dean Erwin Chemerinsky, but none responded to emailed requests for comment.

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Bridget McCaughey reports for The College Fix.



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