Many people believe that the Biden plan to erase $10,000 in federal student loan debt for millions of borrowers is illogical, but now some even think it might be illegal.
The White House plan is probably going to face legal challenges and this is just going to increase uncertainty for borrowers who are expecting to benefit from the new policy.
Along with this, some are expected to sue the Biden administration over the plan to erase student debt.
The White House has banked on the 2003 Heroes Act that was established after the September 11th terror attacks to undergird this new policy. Their argument is that because of the COVID-19 emergency, the law allows the Education Department to have authority to suspend loan repayment through December 31st and they can cancel loan debt for many borrowers.
But the Third Way think tank, a centrist Democratic organization, has opposed Biden’s plan because of the legal challenges it could face.
The senior vice president for social policy, education, and politics at Third Way, Lanae Erickson, said, “We’re very concerned that it is going to get held up in court and leave borrowers in limbo.”
The administration’s authority to cancel student loan debt has been a conversation for some months now. In the beginning, it was assumed that Biden would use the Higher Education Act to justify executive action on student loans.
Last week, Biden announced plans to cancel up to $10,000 in federal student loan debt for borrowers making under $125,000 per year. It will cancel up to $20,000 for Pell Grant recipients. The Justice Department’s Office of Legal Counsel released an outline of legal justification for the plan.
Lanae Erickson has argued that there remains a “very high likelihood” that the action will ultimately be struck down.
“It is still very vague congressional language and I don’t think Congress thought when it was passing Heroes that it was giving the department the authority to wipe out student debt,” she said.
Karine Jean-Pierre, the White House press secretary was questioned as to whether the administration is prepared for legal challenges to their plan, but she refused to enter into a “hypothetical scenario.”
The deputy director of the National Economic Council, Bharat Ramamurti, said over the weekend that the president did not want to move forward with loan forgiveness unless he was certain he had legal backing.
“Of course people can challenge actions in court, it happens all the time,” Ramamurti said. “It’s going to be up to the courts to decide whether those are valid claims or not. But we believe we’re on very strong legal ground.”
And Richard Re, a University of Virginia law professor, believes it will be a hurdle to challenge the White House, but some plaintiffs may prevail. He believes if those who sue can show how it will cost them something financially, they will have the chance to be heard.
He has suggested that it may be the loan services that challenge the plan legally. And Erickson believes that it will be borrowers who fall just outside of the parameters for loan forgiveness that will bring lawsuits.
And if the GOP retakes the House in November, the legal challenge could come from them.
Even House Speaker Nancy Pelosi has been on record about the legality of Biden’s plan. “People think that the president of the United States has the power for debt forgiveness. He does not. He can postpone, he can delay, but he does not have that power. That has to be an act of Congress,” Pelosi said.
So, erasing student loans may not be in the bag quite yet.