As the Biden administration continues to evaluate whether it’s possible to enact widespread student loan forgiveness using executive authority, lost in the debate is a simple fact: President Biden and former President Trump collectively have already cancelled $90 billion in student loan interest using executive action.
As the COVID-19 pandemic was rapidly accelerating in March of last year, President Trump issued an executive order suspending all interest accrual for government-held federal student loans. Weeks later, Congress codified the interest freeze when it passed the CARES Act, which continued the suspension of interest to September 30, 2020. President Trump then extended the interest freeze twice more using executive action — first to December 31, 2020, and then again to January 31, 2021. And on President Biden’s first day in office, he signed an executive order to extend the interest moratorium yet again, this time to September 30, 2021.
In total, assuming there are no further extensions, this amounts to 18 months of suspended interest on government-held federal student loans. The U.S. Department of Education released data earlier this month indicating that this comes out to around $5 billion per month. Over the course of 18 months, that is $90 billion in student loan interest that has been cancelled.
Amidst increasing calls to cancel student debt, President Biden has expressed reluctance to using executive action, suggesting that widespread student loan forgiveness simply may not be legal under existing executive authority, absent enabling legislation passed by Congress. But student loan borrower advocates point to the $90 billion in cancellation of student loan interest in response to the pandemic as clear evidence that widespread student loan forgiveness can, in fact, be accomplished through executive action alone. During a Senate hearing earlier this month, Senator Elizabeth Warren (D-MA) cited these actions as she argued that the President has authority to cancel student debt.
Student loan borrower activists, advocacy organizations, and Democratic lawmakers have argued that the Higher Education Act gives the President broad authority to release borrowers from their student loans. A specific provision of the statute provides the President, via the Secretary of Education, with the power to “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” Several student loan legal experts have argued that using this provision to cancel student loan debt is legally sound.
Advocates have also pointed to the HEROES Act, which can provide the President, via the Secretary of Education, with authority to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” in response to a national emergency. This statute was cited as the basis for extending the freeze on student loan interest by both Trump and Biden.
But attorneys under former Education Secretary Betsy DeVos concluded that neither the Higher Education Act nor the HEROES Act confers such sweeping authority on the President to simply wipe out the student loan debt of millions of borrowers on a mass scale. The attorneys argued that this would violate the intent of Congress when it passed both statutes. In a memo to DeVos, they wrote that the “plain text and statutory scheme” of the relevant statutory authorities, and the “controlling interpretative canons, compel us to conclude Congress appropriated funds for student loans with the expectation that such loans would be repaid except in very specific circumstances.”
The White House continues to evaluate options for broad student loan forgiveness. Earlier this month, the administration announced that attorneys under Education Secretary Miguel Cardona will be re-evaluating the potential legal authorities that could be the basis for widespread student loan forgiveness implemented through executive action. The Department of Education will coordinate its efforts with the U.S. Department of Justice, which is also reviewing possible legal avenues for student loan forgiveness using executive authority. It is not known at this time whether this new legal review will lead to a different conclusion.
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