RUTHFULLY YOURS

The Biden administration is using a flatly absurd legal argument to justify forgiving student debt, something even Democrats thought was only a power of Congress not that long ago.

Even the Department of Education thought it was only a power of Congress not that long ago. On January 12, 2021, the department’s office of general counsel published a legal opinion that cited Congress’s power of the purse under the Constitution and said, “The Secretary does not have statutory authority to provide blanket or mass cancellation, compromise, discharge, or forgiveness of student loan principal balances, and/or materially modify the repayment amounts or terms thereof, whether due to the COVID-19 pandemic or for any other reason.”

But now, as if by magic, even though the laws are all the same, the office of general counsel has found legal authority for the secretary of education to go it alone. The legal opinion this time around cites the HEROES Act, which was passed after 9/11, and claims that the emergency powers given to the secretary under that law “could be used to effectuate a program of targeted loan cancellation directed at addressing the financial harms of the COVID-19 pandemic.”

Never mind that the 2021 opinion specifically considered the HEROES Act and found its provisions too narrow for blanket cancellation. Never mind that student-loan recipients have already benefited tremendously from a repayment pause of over two years due to the pandemic. Never mind that the unemployment rate is currently at 2 percent for college graduates, and financial harms from the pandemic are mostly a thing of the past.

A law passed after 9/11 now gives the secretary of education unilateral authority to add nearly $500 billion to the national debt, and, “He is not required to determine or show that any individual borrower is entitled to a specific amount of relief, and he instead may provide relief on a categorical basis as necessary to address the financial harms of the pandemic,” the opinion says. That’s nuts, and it should be laughed out of court by a federal judge.

Some have speculated that the Supreme Court would, based on recent decisions that restricted executive power, put the Department of Education back in its place, but those arguments don’t matter if nobody has standing to bring a case in the first place. An April 15 article in the Virginia Law Review by Jack Hoover considers the question of standing and concludes that it’s entirely possible that nobody in America has it.

Hoover considers the secretary of education forgiving student loans using the Higher Education Act. The secretary of education did not actually use the HEA, rather the HEROES Act, as previously mentioned. But many of the potential plaintiffs would be the same in response to what actually occurred.

One would be taxpayers, who might sue over their money being used to fund illegal activity. But the Supreme Court has limited taxpayer standing to only a narrow range of possible situations, Hoover writes, and taxpayers can only challenge legislative moves, not executive ones.

Former borrowers might want to sue, alleging that they were aggrieved by the action. But they would have a hard time demonstrating concrete injury, Hoover writes, and, “Even if loan cancellation could be conceived of as an injury to former borrowers, an injunction from the judiciary would do nothing to remedy that injury.”

Congress might want to sue, given that the executive branch has usurped its constitutional authority. But Hoover writes that because Congress did appropriate funds for student loans and did hand the administration of those funds over to the executive branch, Congress would not have legal standing to bring a case as the federal legislature, and its purported injuries, would be no different from any other member of the public.

Maybe state attorneys general could bring a case, similar to the ones against Obamacare. But Hoover argues that wouldn’t work, either. No state contracts are being violated, and, “States have no plausible argument that federal debt cancellation would interfere with their own sovereign powers, given that neither the HEA nor loan distributions implicate state governments,” he writes.

The strongest possible argument for standing might be from loan servicers. The federal government does not service student loans itself; it contracts with firms to do that. Those firms could argue they have standing because of the financial injury that loan cancellation has created.

But since the loan cancellation was an agency action, Hoover writes that potential litigants would have to satisfy additional criteria under the Administrative Procedure Act to have standing, and based on past precedent in cases involving the Postal Service and the Bureau of Prisons, loan servicers would likely not be able to meet those criteria. Hoover also notes that if federal contractors got to sue every time a regulatory change hurt their bottom line, courts would be swamped with such lawsuits constantly.

Hoover concludes, “Regardless of political positions on the wisdom of general student loan forgiveness, the fact that the Executive could well modify $1.6 trillion in obligations to the United States government without judicial review presents policy concerns.” Indeed, and that ought to alarm everyone.

Hoover’s is but one law-review article, and other lawyers will have different opinions. But the problem we’re seeing here is one we’ve known about for a long time. There are any number of federal emergency statutes that give the president power to do any number of things. Those laws are nearly always passed with huge bipartisan majorities in Congress. They are based on faith that the president will not abuse the power given to him and only use it for actual emergencies when such powers are needed.

Maybe there was once a time when presidents could be trusted with such power (or, more likely, it was always naïve to do so), but Biden has now demonstrated multiple times that they no longer can. Going forward, Republicans ought to make it a priority to repeal some of the emergency statutes currently in place and clearly define a limited role for executive power in the ones that remain. It is even more urgent that they do so if judicial review is not an option.