Joe Biden is not giving up his dream of eliminating the legal debt of millions of Americans who took out tens of thousands of dollars in college loans and stupidly found out later they couldn’t pay it back. Following the Supreme Court’s righteous smackdown of his initial plan to forgive up to $20,000 in loan debt per student, which would have cost taxpayers up to a trillion dollars, the president decided to double down and become even more generous with other people’s money.
While alternate plans have not been formally announced, the outline of Biden’s loan forgiveness plans has been taking shape within the Department of Education ever since it became clear that there was a good chance SCOTUS would strike down the debt forgiveness plan.
Biden’s new approach is based on the Higher Education Act (HEA) of 1965, which includes the authority for the government to provide student loans, but also allows the U.S. Education Department to “compromise, waive or release loans.”
At least in this case, the authority to forgive loans would fall under the rulemaking authority of the Department of Education. National Economic Council’s Deputy Director Bharat Ramamurti told reporters on Friday, “Even a typical rulemaking process can take some amount of time. You have to do a proposal, it has to receive comments, it has to be finalized, and so on.”
Related: Would Biden Defy a Supreme Court Decision to End Student Loan Forgiveness?
In this instance, it’s even more complicated because so many stakeholders are involved, including all 50 states, student groups, and various interested parties.
“One of the things about the rulemaking process is that we can’t actually prejudge its outcome. Part of how we do this process is how we initiate it. We put a proposal on the table. We work with stakeholders to get their input. That ends up shaping the scope of the proposal… You’ll hear more about that as we get to each state to the process going forward,” Ramamurti said.
Caleb Kruckenberg, an attorney at the Pacific Legal Foundation, argues that the U.S. taxpayer has gone from the frying pan into the fire.
The federal student-loan policy is obscenely complex, but under the Higher Education Act, Congress created a variety of programs to help borrowers who struggle to pay their loans.
Those include Income Contingent Repayment and Income-Based Repayment programs.
With varying terms, these programs limit borrowers’ monthly payments to a percentage of their income. IBR also includes a forgiveness provision after a borrower has made payments for 20 years.
The decision to enact these plans was Congress’ to make, so, regardless of whether it was a good idea, that ship has sailed.
The problem is that Congress gave away control over the terms of the various repayment plans.
Kruckenberg points out that this violates Article 1, Section 1 of the Constitution.
Fortunately, the Constitution has something to say about this.
Article I, Section 1 forbids Congress from giving away its legislative power — “all legislative powers” belong exclusively to Congress, not federal agencies.
Article I’s Appropriations Clause requires federal expenditures to be “in consequence of appropriations made by law.”
The IDR rule is a consequence of a statute that violates both provisions.
The reason we should worry so much about Biden’s Plan B is that lawmakers like Sens. Bernie Sanders and Elizabeth Warren have been pushing Biden to use the Higher Education Act all along to cancel student debt because they knew that basing a debt cancellation program on the HEROES Act was constitutionally weak and would probably be struck down.
Now that Biden wants to use the HEA as a legal framework to cancel the debt, far more debt—up to a trillion dollars—can be eliminated with the wave of the president’s magic wand.
As Kruckenberg points out, “Without judicial intervention, not only is the soundness of the entire student-loan system in jeopardy, but the very structure of the Constitution is, once again, under attack.”
