The Legality of Biden’s Student Loan Forgiveness Plan

With more than 45 million student loan borrowers collectively owing $1.6 trillion, it’s easy to see why funding a higher education has become a lifelong burden for so many people. It no doubt came as a relief to many of these borrowers when, on Aug. 24, 2022, President Biden announced a three-part student loan forgiveness plan to eliminate student loan debt, lower monthly payments, and make college more affordable.

However, opponents of Biden’s plan were quick to question its legality, and a protracted legal battle seems all but certain. Whether the administration’s debt cancellation policy would survive in court isn’t as clear.

Here’s what to know.

What Does Biden’s Plan Include?

Biden’s plan will provide up to $10,000 in federal student loan forgiveness for eligible borrowers, plus an additional $10,000 for recipients of Pell Grants. To qualify for this relief, borrowers must have an individual income of less than $125,000 ($250,000 for married couples). Additionally, the pause on federal student loan repayment that originally began during the COVID-19 pandemic has been extended through Dec. 31, 2022.

When payments do restart, borrowers may also have access to a new avenue for reducing their monthly payments. According to the White House, the U.S. Department of Education is proposing a new income-driven repayment plan that will protect more low-income borrowers from having to make any payments, in addition to capping monthly payments for undergraduate loans at 5% of a borrower’s discretionary income.

Opposition to Biden’s Plan

It didn’t take long after the plan’s announcement for it to begin receiving criticism. Republicans in particular have argued that the plan is unfair to Americans who already repaid their debt or didn’t attend college, in addition to citing potential inflationary consequences. The issue of legality, however, has been raised by critics across the political spectrum. The Biden administration may have been anticipating this concern, as on Aug. 23, 2022, the Education Department as well as the U.S. Department of Justice each released a memo stating student debt cancellation is “appropriate” under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003.

Originally passed following the terrorist attacks of Sept 11, 2001, the HEROES Act grants the secretary of education the authority to “waive or modify any statutory or regulatory provision applicable to” federal student aid programs to alleviate any suffering that borrowers may experience due to national emergencies, such as COVID-19. One of the act’s provisions further specifies that the secretary need not act “on a case-by-case basis,” meaning that they are permitted to “proceed by categorical rules” when determining who is in need of relief.

A Complicated Question of Legality

So is Biden’s student debt cancellation plan legal? Based on the language of the HEROES Act, it would appear to be the case. However, this only holds up if the pandemic still constitutes a national emergency. Although it would be hard to argue that the pandemic’s onset wasn’t a crisis—after all, the HEROES Act was used by former President Donald Trump to justify the original pause on student loan payments—opponents of the plan would likely have an easier time claiming that’s no longer the case today. Further complicating matters is that on Sept. 18, 2022, Biden himself stated that “the pandemic is over” during an interview with “60 Minutes.” (Dr. Anthony Fauci, the president’s chief medical adviser, later told The Atlantic that “[Biden] was saying we’re in a much better place with regard to the fulminant stage of the pandemic. It really becomes semantics and about how you want to spin it.”)

Even if Biden’s plan can be considered legal, that doesn’t necessarily mean it will be considered constitutional. Should the issue be brought before the U.S. Supreme Court, recent history suggests they won’t rule in the president’s favor. Back in August 2021, SCOTUS blocked the Biden administration’s order extending the eviction moratorium, and it did the same for the president’s vaccine-or-test mandate in January 2022. Most recently, in July 2022, the Supreme Court curbed the Environmental Protection Agency’s ability to regulate carbon emissions from power plants. If the administration has been prevented from taking substantial political action without congressional authorization thrice already, it would be surprising if SCOTUS made an exception this time.

The Standing Hurdle

However, while opponents of Biden’s plan are trying to find a plaintiff with the legal standing needed to make a case, they’ve been doing so for nearly a month now. The Job Creators Network issued a press release back on Aug. 24, 2022, stating the conservative advocacy organization is weighing legal options to block the administration’s student loan forgiveness policy. More recently, Americans for Tax Reform President Grover Norquist told Axios that “his organization will either file its own lawsuit, team up with conservative think tanks or state attorneys general, or all of the above.” However, according to Jack Hoover with Virginia Law Review, it’s unlikely that anyone has standing to oppose debt relief in federal court, as it’s difficult to concretely prove both that this relief will harm the plaintiff and that blocking it would rectify that.

At the moment, the only party actually challenging Biden’s plan in court is Daniel Laschober, an Oregon homeowner who previously ran for the U.S. Senate. Representing himself in an Oregon district court, Laschober filed a complaint on Sept 12, 2022, for a temporary restraining order and preliminary injunction arguing that the HEROES Act doesn’t actually give Secretary of Education Miguel Cardona “the wide-ranging authority to discharge or forgive student loan debt on a mass or blanket basis.” Additionally, Laschober’s claim posits that “financial harm to plaintiff resulting from the defendants’ plan to mass forgive student loans is foreseeable, quantifiable, irreparable, and…imminent” on the basis that the relief will result in worsening inflation and a higher interest rate on his mortgage.

The Bottom Line

Even if Biden’s plan survives any potential legal challenges, the majority of student loan borrowers won’t be able to relax right away. If you aren’t one of the 8 million people who the Department of Education already has income data on, then you will need to submit an application to qualify for student loan cancellation, which is expected to be available by early October 2022. Once you’ve filed this application, you should receive your student debt relief within four to six weeks. If you haven’t already done so, you can sign up for further updates from the Education Department here.