Biden's New Education Loan Program Will Face Trouble In The Courts

We argued in these columns a year ago that President Biden's ambitious idea to write off $400 billion in student loans was a terrible policy proposal.

We said it was unfair that non-college-educated taxpayers should subsidize those who borrowed to attend college. It was unjust that borrowers signed an agreement with the American people to repay their loans (issued without any collateral) from the higher earnings they would presumably get after graduating - and a loan forbearance program would send a wrong signal that signed agreements are invalid. It was also reckless for a nation with a growing debt burden to take on even more debt.

In Biden v. Nebraska last week, the United States Supreme Court forcefully struck down President Biden's loan program 6-3, with conservatives not ruling on the merits of the policy but on constitutional grounds. Chief Justice John Roberts said Biden overreached his executive authority to wipe out student loans without Congress's express approval. He noted that issues of such political and economic import as transferring a $400 billion obligation to the Treasury require a congressional vote. In conservative circles, this principle is known as the "Major Questions Doctrine."

When burned this way by a biting decision, most presidents will heed the apex court's advice and learn. But not President Biden, who has a reputation for being stubborn. Within hours of the Supreme Court decision, his staff was peddling another way to pursue the same forbearance policy, this time through the 1965 Higher Education Act.

In every instance an agency under Biden has issued sweeping rules, it has done so under the so-called Chevron deference. Under Chevron v. Natural Resources Defense Council (1984), the Supreme Court ruled that lower courts must defer to reasonable agency interpretations of ambiguous provisions.

Bharat Ramamurti, deputy director of Biden's National Economic Council, shared the White House press podium with U.S. Secretary of Education Miguel Cardona, who had earlier charged that the "Supreme Court ruled against students and families across the country."

Ramamurti said: "From where it stands now, we think the … Higher Education Act pathway that we talked about today is going to be a valid pathway that conforms with the Major Questions Doctrine issue that the Supreme Court raised today." He was referring to the Chevron deference and hoping that Biden lawyers would craft a policy so that courts would deem it to be a reasonable agency interpretation of ambiguous provisions.

Not so fast. Ramamurti is at risk of wilfully violating the spirit of the Supreme Court's order. In a separate decision on affirmative action in which the court said that colleges may not use race as a factor in admissions, Chief Justice John Roberts warned universities about working around the decision: "...universities may not simply establish through application essays, or other means the regime we hold unlawful today. [W]hat cannot be done directly cannot be done indirectly."

Yet, attempting to indirectly push through a loan program of forbearance when the Supreme Court ruled that doing so violates the Major Questions Doctrine is precisely what the Biden administration is trying to do.

The 1965 Higher Education Act allows Secretary Cardona to "compromise, waive or release loans under certain circumstances." Almost anticipating a devious Biden administration move to use the HEA as a workaround, the Supreme Court defined in Biden v. Nebraska what those "certain circumstances" could be.

"The Act authorizes the Secretary of Education to cancel or reduce loans in certain limited circumstances. The Secretary may cancel a set amount of loans held by some public servants, see §§1078–10,1087j, 1087ee. He may also forgive the loans of borrowers who have died or become "permanently and totally disabled," §1087(a)(1); borrowers who are bankrupt, §1087(b); and borrowers whose schools falsely certify them, close down, or fail to pay lenders. §1087(c)."

Discharging $400 billion in loans to anyone applying is not a reasonable interpretation of the statute because the administration would be hard-pressed to define those "certain limited circumstances." Nor is the action interpreting some ambiguous provision.

Besides, the Biden administration has had a terrible record of losing at the Supreme Court whenever it has attempted to assert boundless executive authority.

Here are two instances to jog your memory.

Alabama Association of Realtors v. Department of Health and Human Services, 21A23 (Aug. 26, 2021) (AAR). After the eviction moratorium in the Covid-era CARES Act expired, the CDC took it upon itself to issue a second eviction moratorium forbidding landlords from evicting tenants who had not paid their rent. The Supreme Court sided with the landlords and ruled that the CDC had exceeded its authority, saying that the CDC's moratorium was unconstitutional unless Congress weighed in on the question.

West Virginia v. The EPA. The court ruled 6-3 that Congress, not the EPA, has the power to regulate emissions from existing power plants.

The question for opponents of the Biden policy will be if someone has a rock-solid standing to sue. We will leave this question to lawyers who must search for a plaintiff who can claim harm to bring a case in federal district court. If this happens, we predict the new Biden plan will also be struck down.

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