student loan

The White House has proposed an unprecedentedly generous plan to erase part of the federal student loan debt accrued by millions of borrowers.

The new policy is expected to be challenged in the courts and this could create uncertainty for borrowers who stand to benefit from it.

It’s hard to see a lawsuit succeeding while the administration is imposing the plan.

Standing, in turn, is seen as an obstacle in the case, so there’s some doubt on whether it can be challenged successfully.

The Biden administration relied on the Heroes Act of 2003 that was enacted following the Sept. 11 terror attacks to anchor their plans. The COVID-19 emergency declaration gives the Education Department authority over loan repayments in 2019 because it brings both an end date for payments and debt cancellation for many students.

Groups such as the centrist democratic thinktank Third Way have opposed Biden’s plan in part because of the threat that lays before them should legal challenges arise.

“We are worried it will get held up in court, causing delays and hurting borrowers,” said Lanae Erickson of Third Way.

For months, the American administration has been debating whether they have the legal authority to cancel student loan debt. Leftists are pointing at Joe Biden, hopeful that he will take action. The expectation was that the Obama Administration would use the Higher Education Act to justify executive action on student loans.

Joe Biden has announced some relief for people making less than $125,000 per year and the lowest income earners who are getting a Pell Grant. The memo released by the Justice Department said this plan will forgive up to $10,000 in student loan debt when you file an application. Click here for more information.

The Heroes Act was passed in 2003 with bipartisan support and gives the Department of Education the authority to waive student-loan debt obligations amid a war or national emergency. The law was passed with veterans fighting in Iraq and Afghanistan in mind, but the administration believes that there is also an emergency worthy of this legislation since the coronavirus pandemic was declared a national emergency.

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

Jiménez said, “It is a much better choice strategically, and I think it reduces the probability of successful challenges by a considerable amount.”

Erickson still believes that there is a high chance that the action will be struck down.

“It’s still very vague- Congress is not too specific in the language they use: I don’t think they thought that this was what they were going to be doing when they passed (The Heroes Earnings Assistance and Relief Act),” she said.

That’s a tough question! Normally, we’re not prepared for legal challenges in advance. But it’s hard to predict the future. I can’t do anything to help you there!

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

“People can challenge our actions in court but that’s going to be up to the courts to decide,” Ramamurti said. “But we believe that we’re on very strong legal ground.”

There questions over who would have the right to bring a court case.

Legal hurdles seem to be an obvious problem that cannot be easily overcome, according to UVA professor Richard Re. However, he thinks some plaintiffs may be able to deal with them. “It will be an uphill battle to challenge this measure in court.”

There’s been talk of servicers suing to stop the loan forgiveness. Erickson also said that anyone who falls just outside the income bracket for it, like those who make $126,000 annually, may still be eligible.

Should they retake control of the House of Representatives in the upcoming midterm elections, Republicans could file a lawsuit against student loan forgiveness as early as January.

After Biden announced he would not seek the Democratic candidacy for president, conservative critics have pointed out that there is still some uncertainty over who will be able to file suit, but largely agreed that the policy is unconstitutional and contradicts itself.

Critics point out Nancy Pelosi’s Comments from last July when she expressed doubts about the President’s Authority to remove student loans on his own.

“The president of the US can’t just unilaterally cancel debt. He can only delay it or postpone it.”

American Institute for Public Promotion executive Akash Chougule argued that using the Heroes Act as justification is a misinterpretation of the executive branch’s authority. Recognizing that, according to a memo from former Obama administration counsel for the Education Department, the executive branch likely does not have the power to cancel student debt.

Congressman Tim Ryan (D-Ohio), who was expected to announce his 2020 presidential campaign on Monday in Cleveland, said he’s going to endorse Joe Biden this week. Ryan favors tax cuts over forgiving student loans.

Chougule also suggested the administration was hypocritical, since the White House had quickly moved to lift the Title 42 immigration policy on grounds that COVID-19 quota actually necessitated the loan forgiveness.

“I’m not sure who can sue”, said Neal McCluskey, a policy analyst at the CATO Institute. “But I think the most direct harm is to taxpayers who can’t be repaid and have to cover government spending.”

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