NCLA Tells Department of Education Its Newest Student Loan Debt Cancellation Plan Is Unlawful
Washington, DC (May 17, 2024) – Today, the New Civil Liberties Alliance submitted comments urging the U.S. Department of Education to abandon its latest proposed rule that would unconstitutionally cancel $147 billion of federal student loan debt owed to the Treasury by an estimated 27.6 million borrowers. The plan even proposes to bestow about $19 billion of that on about 750,000 student loan debtors whose average annual household income exceeds $300,000! Outrageously, that sum means American taxpayers would give more than $25,000 apiece to debtor households making over $300,000 per year. Congress has repeatedly declined to erase such debt, and the Department of Education lacks legal authority to do so unilaterally. NCLA calls for an end to this latest Biden Administration attempt at subverting the rule of law to erase student loan debt.
In June 2023, Supreme Court overturned the Department of Education’s previous $430 billion plan to cancel student loan debt via the HEROES Act, taking advice NCLA offered in its amicus curiae brief against the program. The Department’s new proposal, published in April after negotiated rulemaking, would cancel specific loans held under the Federal Family Education Loan program, the Direct Loan program, the Perkins Loan program, and the Health Education Assistance Loan program. The Department claims a section of the Higher Education Act of 1965 gives the Secretary of Education unfettered power to cancel any federally-held student loan debt. But the statute has never been invoked to broadly cancel student loan debt owed to taxpayers before, cannot be read plainly to that effect, and was not understood to authorize such action in the past. The government’s inaccurate reading of the law would render other, pre-existing loan forgiveness programs completely superfluous.
The Supreme Court’s Major Questions doctrine, barring federal agencies from resolving matters of “vast economic and political significance” without explicit congressional authorization, forbids the Department’s new debt cancellation proposal. The plan would also violate the Appropriations and Vesting Clauses in Article I of the Constitution, which reserves all legislative authority and power of the purse for Congress. The Department’s attempt to wield such unrestrained power adds to a now-familiar pattern of executive agencies “discovering” new meaning in decades-old statutory text to claim unheralded and transformative authority to accomplish what Congress has conspicuously declined to regulate. NCLA works tirelessly to stop this pernicious trend from further degrading Americans’ civil liberties.
NCLA released the following statements:
“The Department’s proposal relies on a 1965 statute that allows the Secretary to ‘waive’ certain loans under the Federal Family Education Loan program. But that program no longer exists. And the vast majority of loans that the Department seeks to cancel are made under the entirely different Direct Loan program created in 1993. The Department’s proposal is akin to trying to claim a home loan program allows someone to finance car loans.”
— Sheng Li, Litigation Counsel, NCLA
“If Congress wanted to transfer $25,000 in student loan debt away from people earning over $300,000 per year and onto the American taxpayer (who averages less than $60,000/year after taxes), I suppose it could do so—and then face the wrath of the American voter over the outrage. But the Department of Education cannot reinterpret old law to give it this ill-begotten power. The fact that Congress would never undertake such a dubious debt-cancellation plan is further proof that the Department is acting unlawfully.”
— Mark Chenoweth, President, NCLA
For more information visit the comments page here.
ABOUT NCLA
NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.