Biden Loses Again on Student Loan Forgiveness

Two Obama-appointed judges say the SAVE plan is likely illegal

WSJ editorial. 

"‘That didn’t stop me,” President Biden crowed after the Supreme Court blocked his sweeping student loan cancellation last summer. Well, on Monday federal judges appointed by Barack Obama stopped his latest debt forgiveness scheme too.

The Education Department finalized its SAVE plan mere days after the High Court(Biden v. Nebraska) blocked its $400 billion write-off. The SAVE plan caps monthly payments at 5% of discretionary income—defined as exceeding 225% of the poverty level—and forgives remaining balances after 10 to 20 years. It also waives accrued unpaid interest.

Eighteen states sued on grounds that SAVE wasn’t authorized by Congress and turned loans into grants. Federal judges Daniel Crabtree and John Ross more or less agreed and blocked most of the SAVE plan, though they let some provisions take effect as litigation continues.

Judge Crabtree held that the SAVE plan likely violates the High Court’s major questions doctrine because it is “‘an enormous and transformative expansion in statutory authority without clear congressional authorization.’” The $475 billion estimated price tag over 10 years, he writes, “forgives nearly one-third of all student loan debt.”

He added that SAVE substantially revises the income-based repayment plans that Congress enacted in 2010. The Administration leaned on a provision in the Higher Education Act that lets the Education Secretary craft “an alternate repayment plan” on a case-by-case basis to “accommodate the borrower’s exceptional circumstances.”

But Judge Crabtree said the department’s interpretations of the law “fall short of clear congressional authorization.” He let discrete SAVE provisions that already took effect—namely, the redefinition of discretionary income—continue because he said states didn’t demonstrate that they’d be irreparably harmed.

Judge Ross was more deferential to the Administration. He opined that the law lets the department alter repayment schedules and interest accrual as it wishes. He also excused its administrative lapses, including an inaccurate cost estimate, which didn’t take into account the effects of Biden v. Nebraska. The judge nonetheless blocked the plan’s debt forgiveness provisions for exceeding its legal authority.

The two nationwide injunctions stop the Administration from writing off tens of billions of dollars in debt, though more than four million borrowers will still pay nothing under SAVE while litigation proceeds. Education Secretary Miguel Cardona is terribly vexed, accusing Republicans and “special interests” of harming their constituents by suing to block the plan. Apparently he doesn’t believe elected officials should stand up for taxpayers.

The SAVE plan was another cynical exercise to buy votes, and Biden officials had to know they were stretching the law. As a result, millions of borrowers who were counting on lower payments and forgiveness are in limbo. Don’t young people get tired of being played as pawns by this President?"