Not My Debt

President Biden’s New Student Loan Cancellation Scheme Is Unconstitutional, Expensive, and Unfair

President Biden has announced yet another plan that would transfer hundreds of billions of dollars in student loan debt to taxpayers and benefit families making nearly $313,000 a year. The Supreme Court ruled last year that he does not have this power, but that’s not stopping him from acting illegally. He recently bragged about this, saying, “the Supreme Court blocked it. They blocked it. But that didn’t stop me.” 

Just like his first plan, this new scheme is unconstitutional, expensive, and unfair. Nonpartisan analysts estimate it will cost taxpayers more than $147 billion. 

On June 30, 2023, the United States Supreme Court ruled in Biden v. Nebraska that President Biden had no authority to cancel student loans on a mass basis under a federal law, the Higher Education Relief Opportunities for Students Act of 2003 (“HEROES Act”). 

Undeterred, the Biden administration has now proposed a new scheme to cancel student loan debt for over 30 million borrowers (the “New Debt Cancellation Plan”) by using a different law—the Higher Education Act of 1965, as amended (“HEA”). The proposal is just as unlawful and unfair as the fiscally irresponsible scheme blocked by the Supreme Court in 2023.  

The proposal would cancel, in many cases automatically, an enormous amount of interest on student loans owed to the taxpayers. Government bureaucrats would have unrestrained power to waive debt on a massive basis for whichever preferred group of borrowers they choose. The Constitution does not grant the executive branch that kind of unrestrained authority. 

Scheduled to be finalized before the 2024 elections, it’s clear that the New Debt Cancellation Plan is nothing more than a vote-buying ploy.

The New Debt Cancellation Plan will harm taxpayers and students because it is—

Unconstitutional

The Constitution grants only Congress the power to legislate and to appropriate. Congress has not authorized massive student loan debt cancellation on the scale proposed by the administration or appropriated funds to do so and, in fact, has consistently refused to give the president the authority to do so.  

Expensive

According to a nonpartisan analysis, the New Debt Cancellation Plan will cost taxpayers $147 billion and benefit families with annual household incomes of up to $313,000. A government with a national debt of $34 trillion facing national security challenges from adversaries like China, Iran, and North Korea has no business writing off this amount of debt owed to the taxpayers.

Unfair

Most Americans have not attended college, and most of those who did attend college did not take federal student loans or have already paid them off. It is simply unfair for Americans who did not take out student loans, who paid them, or did not even attend college to pay the debts of those who did, especially for college graduates with household incomes of nearly $313,000 a year.

Mass Loan Cancellation is Unconstitutional

The Constitution gives Congress—and Congress alone—the power to legislate and to appropriate funds. President Biden’s New Debt Cancellation Plan is far beyond the scope of what Congress has authorized him to do under federal law and is an exercise of legislative and appropriations power he does not have. This is a plain violation of the principle of separation of powers enshrined in our Constitution.

With its attempt to use the HEROES Act to justify his unconstitutional power grab blocked by the Supreme Court in Biden v. Nebraska, the Biden Education Department is now relying on similar wording in the HEA that authorizes  it to “compromise,” “waive,” or “release” its right to collect certain student loans as a basis for canceling massive amounts of debt. But the administration is misconstruing the law for political ends: the HEA’s authority to exercise flexibility in individual cases regarding the collection of certain loans does not include the power to alter the terms of loans for over 30 million borrowers at a cost to taxpayers of hundreds of billions of dollars.

Mass Loan Cancellation Is Expensive

The nonpartisan Committee for a Responsible Federal Budget has calculated that the portions of the New Debt Cancellation Plan already announced will cost $147 billion. This is not free money. Current taxpayers and their children and grandchildren will be on the hook. Even worse, this kind of student loan debt cancellation will over time become routine, as borrowers line up every five to ten years to agitate for cancellation of their loans at massive expense to the taxpayer. Like Biden’s first debt cancellation plan in 2023, the New Debt Cancellation Plan will fuel inflation, increase tuition,  and force Americans to pay higher prices for basic needs just when they can least afford it.

Mass Loan Cancellation Is Unfair

President Biden wants to take money out of the pockets of the great majority of American taxpayers who repaid their student loans or never took one out in the first place and use it to cancel the loans of people with advanced degrees making six-figure incomes—including those with annual household incomes over $300,000. It is simply unfair for the administration to shift the responsibility for a student loan from those who took on the debt to those who didn’t.

But there’s more.

The President’s New Debt Cancellation Plan is just the tip of the iceberg. After the pandemic was long over, President Biden leveraged COVID-19 to stop collecting federal student loan payments from borrowers. As of April 2024, this giveaway has cost taxpayers over $200 billion since Biden assumed office, and even now, borrowers who do not pay a penny on their federal student loans face no threat of default or any consequences from the Biden administration. The president has also taken extreme measures to forgive student loans using aggressive giveaway tactics in several long-existing student loan forgiveness programs that have cost taxpayers nearly another $100 billion as of April 2024.

But there’s still more.

The president has created yet another federal student loan forgiveness program—the Saving on a Valuable Education (“SAVE”) plan—that, despite the name, independent experts estimate could cost taxpayers between $475 billion and over $1 trillion over ten years. Eighteen states have sued the Biden administration in federal court to overturn SAVE as contrary to law. A federal court of appeals has issued a nationwide injunction blocking SAVE for now.

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