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Unforgivable Student Loan Forgiveness

The President does not have the legal authority to forgive student loans on his own. Only Congress can enact laws authorizing debt-forgiveness programs. And only Congress has the power of the purse to pay for debt forgiveness. That is why NCLA has filed a lawsuit on behalf of its client, Cato Institute, urging the U.S. District Court for the District of Kansas to stop the Department of Education (ED)’s student-loan-debt-cancellation plan.

Two related lawsuits against the half-trillion-dollar loan cancellation plan, Biden v. Nebraska and Dept. of Education v. Brown, have made it to the Supreme Court and will be argued on February 28, 2023. NCLA and Cato have both filed separate amicus briefs arguing the program is both unlawful and unfair. This cancellation plan, however, is merely the most prominent part of ED’s recent unconstitutional attempts at student-loan-debt-cancellation.

Since October 2020, ED has paused monthly payments and interest accrual for all student-loan borrowers, regardless of their economic situation. The forgone interest alone has cost taxpayers over $100 billion, and in January, ED announced yet a new plan to transform income-driven repayment plans into grants, which will cost another half-trillion dollars over the next decade. Like the loan-cancellation plan being argued in the Supreme Court, both the ongoing pause and the repayment proposal are unconstitutional agency actions that fail to address the unsustainable cost of higher education.

Join us March 1, 2023 as NCLA Senior Litigation Counsel Russ Ryan moderates a discussion on this thorny issue with NCLA Litigation Counsel Sheng Li and Neal McClusky, Director of the Center for Educational Freedom at the Cato Institute.