White House faces legal issues with student loan forgiveness plan

The White House has entered tricky legal territory with a plan to erase $10,000 in federal student loan debt for millions of borrowers.

The plan is expected to face legal challenges, which would cause uncertainty for borrowers likely to benefit from the new policy.

At the same time, those planning to sue the administration over the plan are also expected to face difficulties.

Demonstrating one’s quality in the particular case is seen as a hindrance, leading some to doubt that a future challenge will be successful.

The Biden administration relied on the 2003 Heroes Act enacted in the wake of the 9/11 terrorist attacks to underpin its plan. He argues that due to the COVID-19 emergency, the law gives the Department of Education the power to suspend loan repayments until December 31 and cancel loan debt for many borrowers.

Groups like the centrist Democratic think tank Third Way opposed Biden’s plan in part because of the threat of legal challenges.

“We are very concerned that it will be held up in court and leave borrowers in limbo,” said Lanae Erickson, senior vice president for social policy, education and policy at Third Way.

There have been discussions for months over the administration’s legal authority to write off student loan debt, as progressives increase pressure on Biden to act. The initial expectation was that the Biden administration would use the Higher Education Act to justify executive action on student loans.

Biden on Wednesday announced plans to forgive up to $10,000 in federal student loan debt for borrowers earning less than $125,000 a year and up to $20,000 for Pell Grant recipients. The Justice Department’s Office of Legal Counsel released a memo outlining the legal rationale.

The Heroes Act was passed in 2003 with bipartisan support and gives the education secretary the power to waive debt obligations in times of war or national emergency. The law was passed with veterans fighting in Iraq and Afghanistan in mind, but the administration believes the coronavirus pandemic is covered by law because it was declared a national emergency.

“They very clearly limited their decision to this very specific national emergency hook,” said Dalié Jiménez, a law professor at the University of California at Irvine. “I think they probably did it to avoid a legal challenge or prevent it as much as possible.”

“It’s strategically a much better thing to do, and I think it significantly reduces the possibility of successful challenges,” Jiménez said.

Erickson, however, argued that there remained a “very high probability” that the action would eventually be called off.

“That’s still very vague congressional language and I don’t think Congress thought when it passed Heroes that it was giving the department the power to write off student debt,” she said. declared.

When White House press secretary Karine Jean-Pierre was asked Thursday if the administration was ready for possible legal challenges, she declined to enter into what she called a storyline. hypothetical.

Bharat Ramamurti, deputy director of the National Economic Council, said Friday that Biden did not want to move forward with the loan forgiveness unless he was certain he was on a solid legal footing.

“Of course people can challenge actions in court, it happens all the time,” Ramamurti said. “It will be up to the courts to decide whether these claims are valid or not. But we believe that we are on a very solid legal basis.

There are questions about who could demonstrate standing in a case.

“It’s an obvious permanent obstacle. It seems plausible to me that some plaintiffs can overcome it,” said Richard Re, a law professor at the University of Virginia. “If someone can demonstrate that this measure will cost them something financially, that would probably be the strongest way to have a substantive challenge heard.”

Re and others have suggested that loan servicers could eventually take legal action to end loan forgiveness. Erickson said borrowers who fall just outside the income bracket for loan forgiveness — such as those earning $126,000 a year — may also be able to sue.

If they regain control of the House of Representatives in the upcoming midterm elections, Republicans could also take legal action against the student loan forgiveness plan as early as January, she said, at the Like the complaint filed by then-House Speaker John Boehner (R-Ohio). on the Affordable Care Act in 2014.

Conservative critics of Biden’s announcement acknowledge that there is uncertainty about who would have standing to sue in the case, but they largely agreed that the policy itself is unconstitutional and contradictory.

Critics pointed to comments last July by House Speaker Nancy Pelosi (D-California) when she questioned the president’s authority to unilaterally write off student loan debt.

“People think the President of the United States has the power to cancel the debt. He does not do. He can postpone, he can delay, but he doesn’t have that power. It has to be an act of Congress,” Pelosi said.

Akash Chougule, vice president of government affairs at Americans for Prosperity, argued that using the Heroes Act to justify the measure is a “misinterpretation of executive branch authority,” noting that a former The Obama administration’s attorney for the Department of Education determined in a memo earlier this year where the executive likely doesn’t have the power to write off student debt.

Chougule also suggested the administration was being hypocritical in portraying the COVID-19 pandemic as an emergency that required the loan to be canceled since the White House decided to lift the Title 42 immigration policy on the grounds that the pandemic was no longer an emergency requiring prompt expulsion. migrants.

“The difficulty, I think, is that I don’t know who has standing to sue,” said Neal McCluskey, political analyst at the CATO Institute. “So the most direct harm, it seems to me, is to taxpayers because they’re not being reimbursed and they have to cover government expenses.”

Alex Gangitano contributed.

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