Loan debt relief would break us at least twice

Before the 2020 election, President Joe Biden pledged on the campaign trail that he would do something about student loan debt. Then, less than three months before the 2022 elections, he announced a sweeping and grandiose plan to wipe away the student loan debt of tens of millions of Americans at a cost to taxpayers of about $400 billion over 30 years.

Biden talked about giving “breathing room” to students and former students who were stuck making payments on student loans at a time when they had to deal with all the other expenses of life.

Did you fall for it? Did you go to the polls believing that the president has the power to remove hundreds of billions of dollars from the federal treasury without any authorization by Congress?

There’s no way to know precisely how many voters felt warm, fuzzy and appreciative toward the president and, by extension, his political party, because of the debt cancellation directive. But we do know that approximately 43 million people in the United States have federal student loan debt, and under the Biden plan, according to the administration’s estimate, 20 million people would have that debt totally forgiven.

Ah, democracy. Two wolves and a lamb voting on whether the chops will be served with mint jelly or without.

Many Americans objected to Biden’s debt forgiveness plan, including people who had worked hard to pay off their own student debt, parents who had sacrificed to pay for their kids’ college education without incurring debt, and people who had made the decision to attend a less prestigious university that they could afford, or who did not attend college at all, because they did not want to be saddled with debt as young adults starting their lives.

Today, the student loan debt forgiveness plan appears to have run aground on several large rocks, though it’s not fully sunk yet.

While negotiating the debt ceiling package, Republicans tried to insert a provision to block Biden’s debt forgiveness plan completely. They were unsuccessful. However, they did negotiate an end to the “pause” on student debt payments. Since the start of the pandemic, borrowers have not had to make payments on federal student loans, but the debt ceiling agreement ends the payment pause after Aug. 30 and prevents the president from issuing another extension.

Separately, the House of Representatives recently passed a resolution disapproving the president’s loan forgiveness plan and sent the bill to the Senate, where it passed on Thursday by a vote of 52-46. The measure now goes to the president. The White House issued a statement last month vowing that Biden would veto that resolution if it came to his desk.

Everyone may remember from high school government classes that the Constitution requires bills that spend money to originate in the House, then pass in the Senate, then be signed by the president. The student loan forgiveness plan didn’t follow that path.

Instead, the Biden administration asserted that a 2003 law called the Higher Education Relief Opportunities for Students Act, or HEROES, gave the administration the power to provide debt relief to student loan borrowers in the event of a “national emergency.” This post-9/11 law was intended to ensure that people serving in the military in Iraq and Afghanistan did not end up in “a worse position financially” because of their service during the emergency.

That’s very different than the situation in the country in August 2022, more than two years after the national state of emergency for COVID-19 was declared, but the Biden team determined it was close enough for government work. The administration said the HEROES Act gave the secretary of education the authority to waive or modify the terms of federal student loans, in the waning COVID emergency, at a cost of nearly a half-trillion dollars over three decades.

Not everybody saw eye-to-eye with that reasoning, and lawsuits followed. Two of them are before the Supreme Court right now, with decisions expected by the end of June.

It’s possible that the justices will strike down the debt forgiveness plan as illegal. It’s also possible that they will punt the decision by ruling that nobody has “standing” to bring the lawsuits challenging the president’s plan as unconstitutional. “Standing” typically requires that the party has a connection to or has been harmed by the law or action they are challenging. Just being “a taxpayer” doesn’t qualify.

One lawsuit was filed by Missouri, Nebraska, Iowa, Arkansas, Kansas and South Carolina. Their claim to standing rests on the fact that they will lose revenue from loan-servicing fees if federal student loans are canceled.

A second lawsuit was filed by two individuals in Texas. They say they have standing to sue because they are harmed personally by the program. Specifically, one had a commercial, not federal, student loan and would receive zero loan forgiveness; the other would receive $10,000 in loan forgiveness instead of the maximum $20,000 because of the administration’s qualification rules.

If the Supreme Court agrees that the parties have standing to sue, then the justices can move on to deciding whether this whole scheme is unconstitutional.

It’s easy to sympathize with people who were persuaded to take on crazy amounts of debt to get a degree that may be less than useful in the job market. It’s true that the pandemic response upended the lives and careers of countless Americans. It’s undeniable that the cost of living is going up faster than income, and people are hurting.

But we won’t fix any of this by allowing powerful politicians to tap the treasury in order to pay their supporters ahead of an election. If this plan can’t be stopped, it will break the country in more ways than one.

Write Susan@SusanShelley.com or follow her on Twitter @Susan_Shelley