Most Americans thought the Supreme Court’s rejection of the Biden administration’s student loan forgiveness plan was the final word on the matter. Not so. The Department of Education recently proposed a new regulation to forgive student loans, which, if implemented, would function similarly to the Biden administration’s original plan. The administration’s student loan forgiveness plan is not only a bad policy as it transfers $329 billion in debt to the nation as a whole, but it also raises legal issues.
On May 17, we filed comments in response to the Department’s proposed regulations, urging the Department not to go forward with this proposed regulation because 1) it violates the Supreme Court’s decision in Biden v. Nebraska; 2) the statute in which the Department claims it has authority to cancel student loans (20 U.S.C. § 10082(a)(6)) does not give the Department this authority; and 3) if enacted, the regulation would violate the Administrative Procedure Act.
The U.S. Supreme Court in Biden v. Nebraska held that the Secretary of Education does not have the power to cancel student loans on such a large scale. Although the Secretary does have the power under the Higher Education Act to waive or modify loan programs to a certain extent, this does not grant the Secretary the power to “rewrite the statute from the ground up.” Despite this clear holding from the U.S. Supreme Court, the Department’s proposed regulation once more attempts to broadly cancel student loans, citing the Higher Education Act as its source of authority. In our comment, we explain that the proposed regulation is similar in function and purpose to the program previously struck down by the Court.
We also explain the Department lacks authority under 20 U.S.C. § 1082(a)(6) to implement this proposed regulation. In Biden v. Nebraska, the Court held that the Higher Education Act’s use of the words “modify” or “waive” did not give the Department authority to create a new loan program by eliminating student loans altogether. Further, there is no evidence that Congress meant the Higher Education Act to grant the Department the power to completely eradicate student loans: the language used and statements made by the 1965 Congress shows that they intended for the loans to be repaid.
Finally, we argued the proposed regulation violates the Administrative Procedure Act because regulations “not in accordance with law[] . . . .” violate the APA. The proposed regulation raises serious concerns as to the proper rule of law, separation of powers, and ensuring checks and balances on administrative actions. NTUF fights on behalf of taxpayers to protect them not only from bad fiscal policy, but also bad tax policy that is promulgated through improper means.