Missouri, Kansas lawsuits remind Biden that student loans remain Congress’ prerogative

(The Daily Signal) – In a lawsuit filed on Monday, Missouri invites the federal courts to recognize that President Joe Biden’s preoccupation with canceling student loans is part of a pattern.

Like Biden’s effort to impose an eviction moratorium and a vaccine mandate, and his efforts to alter the composition of the nation’s population and its power supply, Biden’s multibillion-dollar “Saving on a Valuable Education” (SAVE) Plan evidences his tendency to operate as if the White House were a rival legislature opposed to the U.S. Congress.

He insists on forcing his political priorities on the nation by reading marginal sections in old laws to support vast discretionary authority unrecognized by his predecessors in the Oval Office. 

The SAVE Plan, another facet in Biden’s kaleidoscopic project of eliminating student debt, redefines conventional notions like “loans” and “debt” by reimagining them as synonymous with previously distinct concepts like “grant” or “gift.”

That the president lacks the authority to do so is the gist of Missouri’s case and the nearly identical case filed by Kansas less than two weeks ago. In total, 18 states have now joined one lawsuit or the other to prevent the Biden administration from carrying out the SAVE Plan.  

How does SAVE accomplish its bold reconceptualization of once-settled commercial terms? Principally, by changing the terms under which borrowers with income-driven repayment plans repay their student loans.

In the Higher Education Act, Congress set forth limited circumstances in which the secretary of education may cancel student debt, such as when the borrower has been a public servant for a certain period of time, has become permanently disabled, or has died. These limited grants of loan-forgiving power are not the basis for SAVE. Instead, the administration focuses on a separate set of programs under which borrowers will repay their student loans, but are permitted to do so over time and in increments that account for a borrower’s limited income. 

Congress created those programs, too, setting limits on the repayment plans’ duration, on the types of borrowers and payments that qualify, and the amount of income that borrowers must contribute toward their student loans. Despite Congress’ attention to the particulars, Secretary of Education Miguel Cardona takes the view that he has virtually unlimited authority under the Higher Education Act to improve upon these congressional qualifications by varying them downward.   

Under the new Department of Education rule, the secretary has redefined how to calculate discretionary income out of which a borrower must make payments. Whereas discretionary income was previously defined as 150% of the applicable federal poverty guideline, the secretary has now set it at 225%. He then lowered the percentage of discretionary income that borrowers will be obliged to pay monthly toward their loans from 10%, where Congress had set it, to 5%.

The state cases summarize the financial effects: “the typical undergraduate borrower repays less than what they took out: only $6,121 for every $10,000 borrowed,” and “4.3 million out of 7.8 million borrowers under the income-driven repayment plan from the Final Rule have a monthly payment of $0 on their loans.”

In all, the Penn-Wharton Budget Model estimates the SAVE Plan would cost $475 billion over 10 years. For comparison, Penn-Wharton estimated the costs for the previous plan the Supreme Court struck down at $469 billion to $519 billion over 10 years.

Some, no doubt, are wondering why the president even gets another bite at the student-loan apple. Wasn’t presidential power to cancel loans the core of the controversy that the Supreme Court decided against Biden just last year? Recall that in Biden v. Nebraska, the president invoked an emergency statute and the waning COVID-19 pandemic to cancel loans. Thus, the decision dealt principally with that statute, the HEROES Act, and addressed presidential authority under the Higher Education Act only obliquely.

Despite the separate statutory basis, the administration’s goals and justifications are in many salient respects unchanged, ensuring that Biden v. Nebraska will be relevant to determining the outcome in these cases. There, as here, the secretary of education unlawfully claimed authority “to rewrite [the Higher Education Act] from the ground up” to create “a novel and fundamentally different loan-forgiveness program.”

There, as here, the “secretary’s assertion of administrative authority has ‘conveniently enabled [him] to enact a program’ that Congress has chosen not to enact itself.” And there, as here, the secretary asserts “virtually unlimited power to rewrite the Education Act” such that he “may unilaterally define every aspect of federal student financial aid.”

These are just some of the relevant similarities. Yes, the laws, the Higher Education Act and HEROES Act, are different in verbiage and in structure. But it is far from clear that these differences place the administration’s plans on firmer legal footing.

Suppose that the secretary is correct—at least partially—when he says that the Higher Education Act vests him with some authority to modify the parameters of a borrower’s loan-repayment plan. The SAVE Plan still encounters an obstacle when read in statutory context.

As the states point out, Congress distinguished in the Higher Education Act between loans and grants, treating them in separate sections of the law. Yet, by ensuring that most affected borrowers will pay substantially less than what they borrowed, the secretary asserts an unconstrained power to convert money that Congress appropriated for loans into taxpayer-funded grants.

How plausible is it that Congress gave the executive branch this freewheeling authority to innovate as the political convenience of the moment demands?

Even were it exercised on a smaller scale, the principle behind the secretary of education’s assertion would raise considerable political concern and constitutional doubts. When, however, the secretary uses his interpretive authority to impose on Americans a debt burden every bit as large as the one previously struck down—a debt for which many Americans bear no responsibility—then the action bears the hallmarks of what the Supreme Court has termed a “major question.” And no member of the executive branch gets to resolve those without clear authorization from Congress.  

After a notable Supreme Court loss, President Andrew Jackson apocryphally declared, Chief Justice “John Marshall has made his decision; now let him enforce it.” After his own Supreme Court defeat in Biden v. Nebraska, the president gave a pale, geriatric imitation of Jacksonian defiance: “The Supreme Court blocked it, but that didn’t stop me.”

In the SAVE Plan, as in his other student-loan giveaways, Biden evokes democracy’s most ancient demon: wealth redistribution. He trots out the multibillion-dollar beast draped in new statutory garb and declares it lawful.

But Biden is no Jacksonian populist, poor borrowers are not the impetus behind SAVE, and his revised plan appears no more lawful than the previous one for all its new statutory raiment. Rather, unilateral student debt cancellation has long been the project of America’s most elite private universities and its toniest ZIP codes.

In making another dubiously legal bid at student-debt erasure, Biden is not responding to the cries of the needy, but to the howls of those partisans who expect to be the leftist movement’s leaders in the not-too-distant future.