Trump administration was ‘substantially incorrect’ in determining there was no legal authority to cancel student debt generally, Biden’s education department says

It’s no secret that student loan forgiveness has been and continues to be hotly contested.

Since student debt is a burden for millions of Americans, the question arises as to how, and if, a president can legally eliminate some of what is now a $1.7 trillion crisis. President Joe Biden’s administration decided on Wednesday that the authority was there, canceling up to $20,000 in student debt for Pell Grant recipients and federal borrowers.

“All of this means people can finally start to get out of this mountain of debt to pay rent and utilities, to finally think about buying a house or starting a family or starting a business,” Biden said Wednesday. Remarks. “And, by the way, when that happens, the whole economy is better off for it.”

Just before Biden announced the broad relief, his Education Department responded to the conclusion former President Donald Trump made in a January 2021 memo while in office: that authority does not does not exist to cancel the student debt of all federal borrowers.

“We have determined that the Higher Education Relief Opportunities for Students (“HEROES”) Act of 2003 grants the Secretary authority which could be used to implement a targeted loan forgiveness program aimed at address the financial damage of the COVID-19 pandemic,” the department’s general counsel, Lisa Brown, wrote in a memo Tuesday. “We have thus determined that the January 2021 memorandum was substantially incorrect in its conclusions.”

As Brown explained, the HEROES Act gives the Secretary of Education the authority to “waive or vary any statutory or regulatory provision applicable to student financial assistance programs” if the Secretary believes waivers are necessary to ensure that borrowers would not be placed in a “worse position financially” due to a national emergency, which in this case is the pandemic.

However, Trump Education Secretary Betsy DeVos wrote in her memo that “Congress never intended the HEROES Act to be an authority for mass nullification, compromise, discharge, or remission of student loan principal balances, and/or to materially change repayment amounts or terms”. argue that any general relief is beyond Congress.

While Brown has called for DeVos’ memo to be officially rescinded, there will likely still be legal arguments down the road, and even lawsuits, as Biden’s student loan forgiveness is implemented.

Biden himself questioned the legality of student debt relief

During the campaign trail, Biden pledged to endorse $10,000 in student loan forgiveness, but when it comes to amounts like $50,000 that many Democrats were asking for, he expressed hesitation.

“My point is this: I understand the impact of debt, and it can be debilitating,” Biden said at a town hall last year. “I am ready to cancel the debt of $10,000, but not $50 [thousand]because I don’t think I have the power to do it.”

That’s why he asked the Departments of Education and Justice to prepare memos assessing his legal authority to write off student debt broadly. In October 2021, redacted documents revealed that the Ministry of Education was issuing a memo as early as April 2021.

Just before Biden’s announcement on Wednesday, the Justice Department finally released its memo, concluding that Biden’s “targeted assistance to individuals who have suffered financial hardship due to COVID -19 and who otherwise meet required by law” is permitted.

Still, critics of Biden’s plan are unconvinced. DeVos called the relief “100% illegal,” after months of denial from Republican lawmakers who said the authority did not exist for Biden to enact widespread relief alone, and that the power should rest with Congress.

Even after Biden’s announcement, legal battles could still arise. As CNN reported in July, the recent Supreme Court ruling that limited the Environmental Protection Agency’s authority to address climate change could suggest challenges to student loan relief, given the court’s belief that such actions go beyond what Congress intended.

But Democrats continued to believe the authority is there to provide relief to millions of borrowers recovering from COVID-19. A letter from Harvard Law School’s Legal Services Center provided to Massachusetts Sen. Elizabeth Warren in 2020 detailed the Secretary of Education’s legal ability to cancel student debt, and the White House feels the same way.

“Part of what legal authority is being used to do here, in a targeted way, is to make sure that the borrowers most at risk of post-restart distress occur, they are the ones who are going to get the relief,” , Bharat Ramamurti, the deputy director of the National Economic Council, said at a press briefing on Wednesday. “The legal authority gives the secretary the ability to ensure that the pandemic and the emergency do not cause financial harm net to these people.”

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