The Biden-Harris administration’s pursuit of student loan forgiveness has moved from persistent to relentless and can now only be described as reckless. To briefly recap, the administration announced its first plan back in 2022, which the Supreme Court ruled was illegal in 2023. Their second plan, a loan forgiveness scheme disguised as a loan repayment plan, was recently paused by courts while the courts determine whether it is legal or not. This plan is likely to be ruled illegal, too. But the administration’s third plan is probably the most illegal, and it doesn’t even exist yet.
Since the new plan hasn’t been finalized yet, no one knows what’s in it. And yet, last month, the department sent an email to borrowers giving them one month to opt out.
What were they opting out of?
No one knows since there wasn’t anything to opt out of yet. This was unusual and raised all sorts of red flags. The opt-out option was presumably an effort to ensure no borrowers had standing to sue over the plan. But why force borrowers to decide whether to opt out before telling them what they were opting out of?
The most likely explanation is that the administration was trying to ensure it could forgive debts immediately after finalizing the regulations, which is illegal. New regulations must be publicly proposed, open to public comment, revised based on those comments, and finalized.
The Congressional Review Act also requires that major changes wait 60 days from finalization before being implemented, up from 30 days for other regulations. Higher education regulations from the Department of Education face an even longer waiting period, generally needing to be finalized by November 1 to become effective eight months later on July 1. Thus, forgiving loans immediately upon the plan’s finalization would be illegal, to say nothing of forgiving loans under the plan before it is even finalized, which the administration also appeared to be trying to do.
A new lawsuit from seven state attorney general’s alleges that the administration directed student loan servicers to be ready to cancel debt before the plan is even finalized, as soon as September 3. As Preston Cooper writes,
The lawsuit paints a picture of an administration that knows its plans for loan cancellation are illegal and would not survive judicial review. To get around that problem, officials planned to begin cancelling debts in secret, before (or almost immediately after) their official loan cancellation plan is published. That timeline would leave little to no opportunity for lawsuits to block the loan cancellation.
Fortunately, a federal court in Georgia has issued a temporary restraining order that will prevent the administration from forgiving any loans for the next several weeks. More briefings to the court are scheduled for later this month.
This is a remarkable turn of events in two respects.
First, it very unusual for a court to leash an executive agency like this prior to having a finalized regulation. Second, it is very unusual for a court to move so quickly, with the restraining order coming just two days after the lawsuit was filed. Both indicate that the administration was likely preparing to break the law. If that’s the case, upgrading this restraining order to an injunction shouldn’t take much once the regulations are finalized.
This is just more evidence that we need to fundamentally rethink our approach to student loans.
The short-term goal is for the courts to continue preventing any more loans from being forgiven under possibly illegal plans. The second plan is subject to an injunction that achieves this, and if the restraining order becomes an injunction for this plan, too, the immediate threat will have been neutralized. The medium-term goal is for the courts to weigh the legality of the various plans, which are all likely illegal because they violate the major questions doctrine, which requires clear congressional authorization for regulations with major political or economic effects. The long-term goal is to get the government out of the student loan business altogether.
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Let us observe that in no way known to the intellect or conscience of a thinking adult, could anyone suppose it “Constitutional” for a US President to “find,” or otherwise acquire at his own behest, billions of tax dollars, exacted from all working citizens, and give it to lending institutions to pay off the debts of a select group of elite citizens to buy their votes for the party in power. Think about it and try to vote this kind of leadership out of the Oval Office.
it sounds to me like whoever is running this administration — it clearly isn’t Biden and I doubt it is Harris — is getting desperate, and that bergs the question “why.”
First, it is rumored that Trump is leading in males of all ages, including those aged 18-29, and we don’t know how much the antisemitism is really hurting them with the Jewish vote. The 2020 election was determined by large numbers of young college graduates turning out for Biden, Trump would have won otherwise.
Harris’ key demographic is singe college-educated women and that’s why they are making such a fuss about abortion (routinely lying about it) and why they are so desperately attempting to somehow forgive student loans. Abortion is figurative where student loans are real — do I or do I not have to write a check this month?
I don’t think that Harris is doing as well as they’d have us think, that Walz is turning into an unmitigated disaster, and while the Millennials voted for them in 2020 on the promise of student loan forgiveness, they’ve gotta actually produce it to get their vote in 2024.
But there’s another constituency that people often don’t think about — those who make their living in the higher education industry. This is not just professors or even college employees but also the consultants, contractors, grantees and others living off the morass of Federal money that flows through higher education. A lot of institutions are already in serious financial trouble right now, and the axe falls next fall when the children not born during the Great Recession won’t be turning 18 and able to go to college — even if they wanted to. And an increasing number of them don’t.
It isn’t like it was 20 years ago when every college in the country was expanding because the Millennials had arrived on campus — even without the Great Recession, Gen Z would have been a smaller generation because they were the children of Gen X, itself a smaller generation because they were the children of those born during the Depression. We’ve actually had alternating large and small generations all the way back to the Civil war, with a larger number of babies born when the guys came home from that war (as well as WWII).
Hence the current student loans must be forgiven so as to encourage future students to take loans out (with the expectation that theirs will also be cancelled). Not out of any altruistic intention of educating young people but a desperate personal interest in keeping all the seats filled so that the whole calliope doesn’t come crashing to the ground.
And third, what do you think President Trump 47’s higher education policies will be?
Let’s start with Team Hamas — all Trump would have to do is appoint an Assistant Secretary of Education for Civil Rights who takes antisemitism seriously and a lot of institutions are going to be in very serious trouble because they will get a letter to the effect of “you end this stuff tomorrow, or we will end your Federal funding on Friday.”
It won’t just be college presidents called in front of Congress — it will be colleges filing for bankruptcy because they no longer are getting all of the Federal money and tax breaks and the rest…
I don’t know if it is political and the campi administrations are forced to support Team Hamas, or if they genuinely want to — and suspect it is a combination of the two — but reality is that they aren’t going to be able to reign in the antisemitism, not after having let it run wild last year, not with half their faculty supporting it (if not participating in it), and not after having tolerated BLM before this.
If Trump wins, Higher Education is going to look very different by the Fall of 2026. I wouldn’t be at all surprised if Trump 47 sent in Federal troops (as Eisenhower did) to ensure student civil rights. The Higher Ed Act still hasn’t been reauthorized, just funded, and a MAGA Congress may well re-write it into something quite different from what it is today.
Hence Trump can’t win, and that explains the desperation exhibited in the loan forgiveness schemes. This isn’t an altruistic concern about those who owe repayment on the loans….
Speaking of “reckless,” how can a court administer a preliminary injunction against a speculative harm? The states did not suffer a harm and the petition should have been denied by the district court judge due to lack of “ripeness.”
Wow, there isn’t even a basic understanding of student loan repayment in this article. Congress put together repayment plans in 1993, first one introduced in 1994. George W Bush created the public service forgiveness plan in 2007 – 10 years of public service would grant forgiveness – and that was not honored in 2017 by DeVos and the Trump administration.
Repayment plans have been around a very long time, authorized by congress. The current supreme court is grotesque so who knows how they will rule, but this is an authorized plan.
Include facts and references if you’re going to spout this drivel. This isn’t a hard subject to research.