As President Biden’s first and only term nears its end, it’s clear that his primary education policy legacy will be transferring student loan balances from those who voluntarily took out those loans to those who did not. Much of the rest of his agenda has faltered or been delayed. However, last week, the US Court of Appeals for the 8th Circuit put the crown jewel of Biden’s loan forgiveness agenda on hold.
Eighteen Republican attorneys general are already suing to stop the Saving on a Valuable Education (SAVE) Plan, the most consequential and permanent of all loan forgiveness efforts. They won injunctions from two separate Obama-appointed judges before the 10th Circuit allowed parts of the rule to take effect. However, this new, much broader, pause from the 8th Circuit puts time on the side of plaintiffs as arguments are heard in court, preventing the Department from irreversibly forcing billions in loans out the door. If these two courts reach different conclusions, a Supreme Court showdown on student loans similar to last year’s battle over loan forgiveness is especially likely.
If these lawsuits fail, hundreds of billions of dollars would be transferred from taxpayers to student loan borrowers without congressional authorization. Long-term, SAVE would spell disaster for multiple parties in higher education, propping up the very most expensive college programs with the very worst labor market outcomes and encouraging students to borrow more, colleges to raise prices, and colleges that currently avoid issuing loans to begin doing so. Increased community college borrowing could allow millions of Americans to put their living expenses on the government’s tab and never pay it back.
Despite these temporary victories, damage to the federal treasury has already been done. More than $400 billion have been handed out, which has contributed to inflation and the national debt while undermining the future of higher education accessibility. And despite successful court challenges on other programs, there is an ongoing steady stream of announcements that they have (also likely illegally) tweaked programs such as Public Service Loan Forgiveness to forgive several billion at a time.
But the Administration is not finished yet. Regulatory filings indicate a separate planned October “surprise” to illegally initiate hundreds of billions more in mass loan forgiveness despite the Supreme Court making clear that the Department of Education has no such power. Of vital importance, states should be taking proactive steps now as the Administration might also seek to circumvent the courts here by erasing debts the moment the new, legally questionable rule is issued.
Meanwhile, the Biden administration is seizing every possible opportunity to achieve its political aims and hold on to power. In a recent government email sent to millions of borrowers, which itself may constitute a violation of the Hatch Act’s prohibition on partisan activity with federal resources, Secretary Miguel Cardona insisted that “federal courts have issued rulings in lawsuits brought by Republican elected officials who are siding with special interests and trying to block Americans from accessing all the benefits of the most affordable student loan repayment plan in history.”
He continued, “Let me be clear: President Biden and I are determined to lower costs for student loan borrowers…no matter how many times Republican elected officials try to stop us,” before concluding with a promise: “We’ll keep fighting for you!”
There are already eight million borrowers enrolled in SAVE (a number that will inevitably continue to climb rapidly). While the Biden administration continues to pause borrowers’ payments each time it loses in court, the good news is that we could be nearing an end to this madness.
Despite early fears that no one could meet the standing threshold to challenge Biden’s initial loan forgiveness, it was struck down by the Supreme Court. And although I initially worried that SAVE might not be challenged, eighteen states have now stepped up and multiple courts have indicated serious skepticism about SAVE’s legality. Credit is due to these 18 attorneys general for taking a risk and standing up to this abuse of power.
Originally published by the American Enterprise Institute. Republished with permission.
For more great content from School Reform News.
For more from The Heartland Institute.
