Student loans

Did the Biden administration just drop a big hint on student loan forgiveness?

The Biden administration may have just dropped an important hint about the possibility of enacting broad student loan forgiveness. Although no formal decision has been made, a new Federal Court filing shows that the administration approves, at least to some extent, of a legal argument that existing federal law provides a basis for the cancellation of student loans through executive action.

Here is the latest.

Student loan forgiveness under the Higher Education Act

Since Biden took office last year, a broad coalition of student loan advocacy organizations and leading congressional Democrats have pushed President Biden to write off student loan debt on a massive scale using the action of the executive.

During his 2020 presidential campaign, Biden pledged to support $10,000 in student loan forgiveness for each borrower. But since taking office, he has been reluctant to proceed without legislation passed by Congress and has expressed concern that he lacks the legal authority to unilaterally write off student loan debt through executive action. Biden has appeared more open to the idea in recent months, but he hasn’t made up his mind.

Advocacy organizations, Democratic leaders in Congress and several leading legal experts on student loans have argued that the president does in fact have the legal authority to cancel student debt through executive action. They point to the Higher Education Act (HEA) — a sprawling statute that governs much of the federal student aid system — the wording of which, they say, gives the president, through the secretary to the ‘Education, a broad power to “compromise, waive, or discharge any right, title, claim, lien, or demand” associated with federal student loans.

Borrower advocates have argued that this clause is specific and general enough to allow the president to act. In wide circulation notelawyers for the Project on Predatory Student Lending at Harvard Law School’s Legal Services Center wrote that this clause confers “broad” authority to cancel large-scale federal student loans.

Biden had appointed attorneys from the Education and Justice Departments last year to write a legal analysis to determine whether the HEA or other laws confer sufficient authority to allow a president to enact a loan forgiveness. student without Congress. The content and conclusions of this analysis have not been made public.

In court filing, Biden administration cites HEA compromise authority to back student loan forgiveness initiative

In a filing in court this week, the Biden administration hinted that it agrees that the HEA does in fact confer broad authority to write off student debt — at least to some degree.

The deposit concerned Sweet vs. DeVos – a class action brought by student borrowers for blocked borrower defense claims until repayment. Borrower Defense to Repayment is a federal student loan forgiveness program for borrowers who have been misled or defrauded by their school. Last month, attorneys for the Department of Education and the Student Borrowers Class announced a proposed joint settlement agreement for the case that would forgive $6 billion in federal student loans for more than 264,000 borrowers who were attending some schools.

In its filing this week, which the Department of Education submitted in opposition to a motion by several affected schools to intervene, the Biden administration suggested that the $6 billion in student loan forgiveness the parties have proposed under the settlement agreement would not actually be implemented through Borrower’s Defense until Repayment, but rather through the HEA’s Compromise Authority. The Department of Education pointed to the Secretary of Education’s “considerable discretion under the HEA to compromise and settle claims” related to federal student loan programs.

“The Secretary’s ‘compromise and settlement power’ includes the power to compromise and discharge student loan debts owed to him by Federal borrowers on terms determined by the Secretary,” the department wrote in its filing. This language suggests that the Education Department’s position may align, at least to some degree, with the broad interpretation pushed by congressional Democrats and student loan advocacy groups.

The court has yet to rule on the ministry’s arguments.

Biden’s next step on student loan forgiveness remains unclear

Still, the Biden administration has stressed that no decision has been made on a broad student loan forgiveness. And while the administration’s interpretation of the HEA, as described in this week’s court filing, holds promise for borrowers, it does not necessarily guarantee that the president will use executive action to largely undo student debt. The administration could argue, for example, that this broad authority is intended to settle “claims” over federal student loans, as it suggests in its filing, rather than apply to broad unilateral action affecting millions. of people.

Still, the department’s statement that the clause confers “considerable discretion” to jeopardize federal student loans “on terms determined by the Secretary” is potentially significant.

Officials have consistently said Biden will make a decision on student loan forgiveness before the student loan hiatus ends. That expiration date – August 31, 2022 – is fast approaching.

Last week, a reporter asked Biden when he would make a final decision on student loan forgiveness.

“At the end of August,” he said.

Further Reading on Student Loans

Biden to decide on three key student loan relief initiatives within weeks

The Biden administration approved $26 billion in student loan forgiveness, but borrowers face growing uncertainty

3 Key Student Loan Forgiveness Opportunities Could End Soon – Here’s How to Apply

If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do