The U.S. Supreme Court could reject President Joe Biden’s attempt to enact wide-scale student loan cancellation.
Here’s what you need to know — and what it means for your student loans.
There’s potentially bad news for student loan borrowers hoping for wide-scale student loan forgiveness. Student loan borrowers have eagerly awaited for the president to decide the future of student loan forgiveness. However, the White House has denied that Biden agreed to cancel $10,000 of student loans for borrowers. With student loan borrowers singing the student loan blues, it’s unclear if student loan cancellation will ever become a reality. Even if Biden proceeds to cancel student loans for millions of student loan borrowers, one institution may stand in his way: the U.S. Supreme Court. Here’s why the Supreme Court could reject Biden’s attempt to cancel your student loans.
Student loan forgiveness: the Supreme Court may reject
What does the Supreme Court have to do with student loan forgiveness? After all, Biden hasn’t enacted wide-scale student loan forgiveness. However, as Axios explains, recent Court decisions demonstrate a pattern of limiting executive power. Student loan forgiveness could be next. For example, the Court has recently prevented:
- the CDC from enforcing an eviction moratorium due to the Covid-19 pandemic;
- OSHA from enforcing a vaccine mandate in workplaces; and
- the EPA from implementing proposed limits on greenhouse gasses.
After the recent ruling on abortion, there could be additional decisions to “restrict the authority of regulatory agencies in the executive branch.” Specifically, the Court could limit executive branch authority — and the U.S. Department of Education could find its legal power limited.
Student loan cancellation: authority to cancel student loans
Supporters of wide-scale student loan forgiveness, such as Sen. Elizabeth Warren (D-MA) and Senate Majority Chuck Schumer (D-NY), say that Congress empowered the president nearly 60 years ago to cancel student loans. The Higher Education Act of 1965, they argue, granted the president an unlimited right to cancel an unlimited amount of student loan debt for an unlimited amount of student loan borrowers. Therefore, through U.S. Secretary of Education Miguel Cardona, Biden could cancel more than $1 billion of student loans for borrowers if he decides to act.
Student loan cancellation: legal basis to reject
According to Axios, at least two legal doctrines could restrict Biden’s ability to cancel student loans. For example, the Court’s conservative justices have expressed doubt regarding:
- The Chevron Principle: if a law isn’t clear on its face, then the courts will defer to the executive agency that implements that law; and
- The Nondelegation Doctrine: Congress cannot delegate to the executive branch any of the powers the Constitution gives to Congress.
How does this relate to student loan forgiveness? Under the Chevron principle, the U.S. Department of Education manages student loans and, therefore, would decide how to cancel student loans. While the Higher Education Act references the Education Department’s ability to cancel student loan debt, the law doesn’t specifically state the Education Department has the sole power to cancel an unlimited amount of student loan debt. The Court likely will interpret any statute by examining original intent. If Congress wanted to surrender all authority for student loan cancellation to the executive branch, the Higher Education Act would have explicitly stated so in the statutory language. However, Section 432A of the Higher Education Act generally gives the Education power to “modify, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.”
The “nondelegation doctrine” would further strengthen the Court’s ability to reject wide-scale student loan cancellation. Justices Neil Gorsuch, Clarence Thomas and Samuel Alito could rely on this doctrine to deny Biden’s attempts to implement wide-scale student loan relief. This doctrine says that even if Congress delegates a power to the executive branch, it could still be unconstitutional. How does this apply to student loan forgiveness? Let’s assume that Congress delegated its authority to cancel student loans to the executive branch, as Warren and Schumer have argued. For example, the conservative majority could still deem this unconstitutional because the U.S. Constitution grants Congress the power of the purse. This constitutional power includes the creation and cancellation of student loans, and as the Court could argue, Congress can’t delegate its authority to the president. Biden hasn’t announced whether he will cancel student loans, how much he could cancel, and how he would cancel student loans. For student loan borrowers, there’s still hope Biden could develop a strategy to cancel student loans that limits his legal exposure. Until Biden makes a formal announcement, student loan borrowers should focus on the restart of student loan payments next month. Here are some of the best ways to pay off student loans save money:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)