The student loan forgiveness program issued by the Secreatry of Education had been challenged by six States
In 2022, in response to the COVID-19 pandemic, the Secretary of Education issued a comprehensive student loan forgiveness program which canceled roughly $430 billions of federal student loan balances: it completely erased the debts of 20 million borrowers and lowered the median amount owed by the other 23 million from $29,400 to $13,600. To issue such program, the Secretary relied on the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act), a statute under which the Secretary “may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the [Education Act] as the Secretary deems necessary in connection with a war or other military operation or national emergency”. According to the Secretary, the HEROES Act gave him the authority to enact such a wide-raging plan. However, six states disagreed and filed suit arguing that such statute did not authorize the loan cancellation plan.
The suit, which was first addressed by the Federal Court of Appeals for the eight circuit, ended up on the bench of the Supreme Court of the United States. With judgment of 30 June 2023, the Supreme Court upheld the complaints filed by the plaintiff states and found that the program enacted by the Secretary was beyond the scope of its statutory authority. The Court noted that the statutory permission to “modify” the statutory provision applicable to the student financial assistance programs must be read to mean “to change moderately or in minor fashion. That is how the word is ordinarily used”. Instead, with its program the Secretary “created a novel and fundamentally different loan forgiveness program [which] expanded forgiveness to nearly every borrower in the country”, something that the statute did not authorize. The Court further noted that the Secretary had not limited itself to waive some statutory provisions but had actually “draft[ed] a new section of the Education Act from scratch by “waiving” provisions root and branch and then filling the empty space with radically new text”. Finally, the Court rejected the Secretary’s argument that the unprecedented nature of its debt cancellation plan reflected the pandemic’s unparalleled scope and highlighted that none of the Government’s considerations could justify the Executive’s seizure of the Legislature’s power.
Reference: Biden v. Nebraska et al., Supreme Court of the U.S., 30 June 2023.