Groups can sue Biden’s debt plan, but they need a plaintiff


Conservative groups and Republican state attorneys general are exploring legal options that could throw a wrench in President Biden’s plan to forgive a third of $1.7 trillion in federal student loan debt. They say the plan is an illegal use of executive authority, but proving that in court could be tricky as groups scramble to find a plaintiff with the legal standing to sue.

Biden announced Aug. 24 that he would forgive up to $10,000 in student debt for borrowers earning less than $125,000 a year, with up to $20,000 in relief for Pell Scholarship recipients. The announcement brought relief to many people weighed down by unpaid debts. However, others, especially those who have paid off their debt or who did not go to university, see it as a handout at the expense of taxpayers.

Various lawmakers, including some Democrats, have said Congress has the power to cancel student loan debt, as opposed to the president. Even House Speaker Nancy Pelosi said last year that “the president can only defer, delay, but not forgive student loans. It would take an act of Congress, not an executive order, to cancel student loan debt. However, Pelosi has since changed his mind, declaring in august“Now clearly it looks like he has the power to do that.”

Several Republican state attorneys general are also exploring legal options. The Washington Post announced Thursday that Republican attorneys general from Arizona, Missouri and Texas met privately to discuss legal strategies.

Other conservative groups, such as conservative think tanks Heritage Foundation and Job Creators Network, a group led by Republican donor Bernie Marcus, are also exploring legal options. Marcus recently told Fox News that his band was “aligning our complainers.”

A successful legal challenge could upend Biden’s plan, which is expected to give the president and the Democratic Party a boost ahead of the midterm elections. Despite speculation, no official plans to take legal action have been announced.

Who could sue?

Critics of Biden’s debt relief plan are scrambling to find anyone or an organization that could argue his standing in a potential lawsuit. However, this proved tricky.

In order to assert standing, a plaintiff must prove they have been harmed in some way, and groups seeking to bring legal action against Biden’s debt relief plan say it was difficult.

“There is a possible world in which the President’s actions would be legally vulnerable and yet no one would be able to stand up and in court and do the required challenges. So it’s still an open question,” said Jack Fitzhenry, legal policy analyst at the Heritage Foundation. “It’s really not clear at this time that anyone else has standing.”

Legal analysts focused on the issue are considering several options for plaintiffs, including taxpayers or borrowers whose income is just above the annual income threshold of $125,000 (or $250,000 for couples filing jointly), which which makes them ineligible for relief. However, a court might not accept them as plaintiffs, and the idea of ​​someone making $126,000 could lead to the program being expanded.

It is not so straightforward for a taxpayer to claim that they have been wronged by Biden’s student debt relief plan on the grounds that they cannot benefit from the program. Fitzhenry explained, “There is differential treatment here and there is certainly an argument about fairness, but it’s not so much a legal argument as it is a political one.”

Senator Ted Cruz of Texas, an outspoken Republican lawmaker opposed to debt cancellation, said in a radio interview that he did not know if either of these arguments would hold up in court.

An alternative route could be loan servicers, who could say they are losing revenue. Fitzhenry said loan managers would be the group most likely to be able to assert his quality because they have what he called a “credible claim of injury that would be concrete in particular to them and also directly traceable to the actions of administration”.

However, no loan officer has indicated that they are interested in a legal challenge.

Where are the plaintiffs?

Scott Buchanan, president of the Student Loan Servicing Alliance, said he wasn’t sure the loan officers would have standing in the case. “I don’t know if anyone thinks about it or what they think about it in terms of their own legal actions,” he said.

The Biden administration released a legal memo from the Justice Department that outlines its authority to write off student loan debt through powers listed in the HEROES Act of 2003. The act gives the Secretary of Education the power to “ waive or modify any law or regulation applicable to » the federal student loans program if such action would alleviate the hardship felt by borrowers as a result of a national emergency.

In Biden’s case, the administration claims it has the power to cancel student debt through the HEROES Act due to the state of emergency in place for the COVID-19 pandemic since January 2020. The state of emergency is currently about to lift on October 13.

Last week, Bharat Ramamurti, the deputy director of the White House National Economic Council, told reporters: “We believe we are on a solid legal footing. He said the administration held that belief since the same authority had been used previously by the Trump administration to extend the pause on student loan repayments.

“It hasn’t been challenged in court. It hasn’t been found to be abusive by any court. It’s the same statute that the previous administration used and that we used, that we’re using now for this action. Ramamurti said. “Part of what legal authority is being used to do here, in a targeted way, is to ensure that the borrowers most at risk of post-restart distress occur, they are the ones who are going to get relief.”

John King Jr., Secretary of Education for the Obama administration, said in an interview, “I think the power to cancel student debt is very clear,” and added, “I think the president is using the tools available to him.

Critics of Biden’s debt relief plan, including prominent Republicans, have long argued that the administration overstepped its authority by canceling student loan debt and even making changes to student loan programs, which they say should only come from Congress. A lawsuit could challenge Biden’s use of executive authority, which is the first of its kind in history.

“The sheer size of this program will attract a lot of attention. But the scale alone won’t get you to the big questions. The other consideration, on top of that, is that you have unprecedented use of this law,” Fitzhenry said.

The recent Supreme Court decision in West Virginia v. Environmental Protection Agency said regulatory agencies must be able to prove they have clear authority from Congress in order to use executive branch action in “extraordinary cases” of “political and economic significance.” If a lawsuit over Biden’s student debt plan materializes, it could throw the plan into the Supreme Court’s crosshairs.

“The administration is going to have to face this decision on the merits, and they’re going to lose,” said Lanae Erickson, senior vice president of Third Way, a center-left group that views debt cancellation as a ” band-aid solution.” “There is no doubt that this is an action of economic and political significance.” Erickson said in an interview with Inside Higher Education, “I know there are people who are [preparing] to file legal challenges as we speak. I think we’ll see the first of them come out as soon as next week.

Erickson said she believed groups that were keen to sue the administration over its approach to student debt relief had to change their legal strategy at the last minute because they expected the administration proves their legal basis with the Higher Education Act 1965, not the HEROES Act.

The Biden administration has said it plans to have its debt relief plan implemented by beginning of October. Groups seeking to take legal action against the Biden administration don’t have to race against time to file a lawsuit. However, if the Biden administration begins to implement its plan and is then hobbled by a legal dispute, a huge mess could be created for many borrowers who now expect their student debt to be forgiven.

“If anyone who is running this analysis right now and likes the look of their claims, I suspect they will try to file soon enough and certainly before the administrative wheels kick in to implement this plan,” Fitzhenry said.

Trust in the Biden administration

Some debt relief supporters have expressed confidence in the Biden administration’s legal basis and are skeptical of threats of legal action.

Mike Pierce, executive director of the Student Borrower Protection Center, said last week: ‘I think that indicates that we are now approaching a week after this announcement and you haven’t seen any ambitious Republicans stepping into a federal court. and seek an injunction.

Regardless of the lawsuits, Republicans will likely use student loans as a massive talking point this election season. Already, Republicans in the House have introduced legislation that would cut the federal student loan program by imposing borrowing limits on certain loans and eliminating the civil service loan forgiveness program, which has so far provided more than $10 billion in debt relief to public service employees.

Currently, these proposals cannot garner much support in the Democratic-controlled House. However, things could change with speculation that Republicans could take control of the House in January after the midterm elections.

“We recognize that, and it’s a concern,” said Terry Hartle, senior vice president of government relations and public affairs at the American Council on Education. “The things they are talking about are pretty substantial changes. It’s not even clear that Congress would be able to enact them, let alone get the president to sign them. It’s an indication of how some political figures view higher education, and it’s worrying, but it’s not like it will happen automatically, depending on the election.


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