What Happened with the Cancellation of Student Loans?

 The liberty principle for this Freedom Friday concerns freedom from tyrannical executive orders. Today marked the last day of the U.S. Supreme Court season, and the final decisions were made known. One decision concerned President Joe Biden’s announcement in August 2022, that he would use the HEROES Act to cancel the federal student loans of certain deserving borrowers. The HEROES Act was meant to help active-duty soldiers, not all borrowers.

According to an article by Jack Fitzhenry in The Daily Signal, “over 40 million borrowers qualified at an aggregate price of $430 billion” to be relieved of their student loan debt. The announcement by Biden brought out several questions: “how had college graduates, a demographic which then had only 2% unemployment, been affected financially by the pandemic? Why was this species of relief announced well after the pandemic’s worst effects but suspiciously close to a midterm election? Speaking of suspicion, why did this relief mirror a Biden campaign promise in every relevant particular.” The questions went unanswered. 

States and nonprofits sued to stop the action, but many of them lacked standing. However, Biden v. Nebraska was heard by the Supreme Court. Chief Justice John Roberts wrote for the six-justice majority that Missouri “had standing because it founded and funded an entity, ‘MOHELA,’ that was paid to service federal student loans. MOHELA would lose money because of the canceled loans, and because MOHELA was Missouri’s ‘instrumentality,’ its financial injury could be attributed to the state.”

On the merits of the case, Roberts “rejected the argument that the power to ‘waive or modify’ laws conferred by the HEROES Act enabled the education secretary to create a ‘novel and fundamentally different loan forgiveness program’ more to the president’s liking than Congress’.”

The waiver and modification powers, whether read singularly or in tandem, did not enable the secretary to “draft a new section of the Education Act from scratch by ‘waiving’ provisions root and branch and then filling the empty space with radically new text.” Yet, that was effectively what the secretary had done when he issued his cancellation plan as “modifications” to the student loan program. This went well beyond HEROES’ boundaries.

The case’s seriousness did not prevent justices in the majority from coming up with some humorous analogies. Roberts channeled the late Justice Antonin Scalia when he mused that the “Secretary’s plan has ‘modified’ the cited provisions only in the same sense that ‘the French Revolution modified’ the status of the French nobility’ – it has abolished them and supplanted them with a new regime entirely.” This is always a great citation, though I’d prefer if Roberts refrained from giving progressives ideas on how to handle the opposition….

Per Roberts, cancellation “amounts to nearly one-third of the Government’s $1.7 trillion in annual discretionary spending. There is no serious dispute that the Secretary claims the authority to exercise control over ‘a significant portion of the American economy.’”

No cancellation of this magnitude had ever been set in motion, let alone without any direct input from Congress. Is it plausible that Congress meant to authorize this some 20 years ago when it drafted the phrase “waive or modify”?

As Barrett explained, “commonsense principles of communication” should lead us to answer no because “an initiative of this scope, cost, and political salience is not the type that Congress lightly delegates to an agency.” That is a view we should take seriously. For pretensions to vast power will continue to assert themselves as well-intentioned responses to the next emergency on the horizon.

This decision was a big loss for Biden, but he is so dense that he does not even realize how wrong he was. The borrowers who voted for Democrats were duped by a lying president because they do not know and/or understand that the House of Representatives holds the purse strings for the nation. Biden’s plan was bribery for votes – 77% of youth voters voted for Democrats.