On June 30, in the wake of losing a Supreme Court lawsuit over his $400 billion plan to cancel student loan debt, President Biden said he was going to try again.
So what exactly is he proposing to do?
In a fact sheet announcing this second try, the White House wrote that the Education Department will attempt to use the authority it believes it has under the Higher Education Act of 1965. In the Supreme Court case, the Biden administration tried to claim power under a different law, the HEROES Act.
This process is likely to take several months at a minimum, and it’s unclear how many people might be eligible for any relief that the administration would eventually offer.
The fact sheet was short on details, but the administration said more in a news conference, referring repeatedly to the “compromise and settlement authority” that the education act allows.
For further explanation, I turned to Luke Herrine, an assistant professor of law at the University of Alabama and the former legal director of Debt Collective, a membership organization and advocacy group working to cancel student loan debt. He is also the author of “The Law and Political Economy of a Student Debt Jubilee,” a paper published in the Buffalo Law Review in 2020.
My interview with Professor Herrine has been edited and condensed for clarity.
What’s the back story of your interest in the laws around student debt?
I decided to go to law school as part of the long aftermath of the financial crisis. I’d become increasingly politicized and just disgusted with the political system, and I thought it would be useful to go to law school to figure out how the system works.
Through my work with Debt Collective, I came upon the compromise and settlement authority, which other lawyers more experienced than me had pointed me to. Why couldn’t this be used much more broadly? So I wrote the law review article that just happened to be well timed.
So what is the relevant legal authority here, both the phrase and its origins?
The Higher Education Act is the big statute that governs federal student loans, the authority that allows the Education Department to issue them and create income-driven repayment, Public Service Loan Forgiveness, all of that.
There is a particular provision that gives the secretary of education authority to act as someone in charge of the program and settle loans on a discretionary basis. It allows the secretary to “enforce, pay, compromise, waive or release” debt.
What does “compromise” mean? As a term of legal art, it means taking a deal. Even more clearly, “waive and releasing” means “you don’t owe this anymore.” That is what the authority says.
And what was Congress’s intent with this phrase?
As far as I can tell, there was no detailed conversation here. But I believe that what they meant was that if we’re going to have an agency that is going to manage debt — people might be resisting paying and there are all kinds of problems collecting — we should give the agency, as a wise administrator, some flexibility.
This notion that government agencies don’t get to make real big moves unless Congress has quite specifically given them permission to do so is a “major question” if I’ve ever seen one, which gets to the doctrine that the majority of Supreme Court justices now cite with fervor. This is a major question, right?
I don’t know if I can say that it isn’t. Clearly, the court is going to look askance at the breadth of any relevant authority, especially one that hasn’t been used in this way before.
How then might the administration make this less major? I’m imagining a narrowing of eligibility to certain borrowers in default, where collection is time-consuming and expensive?
I think everyone agrees that the Higher Education Act gives the secretary authority to compromise when litigating against a borrower who is already in default. And I think most people agree that in anticipation of collection actions against borrowers, that they would want to cut their losses.
So maybe we have our own doubts about the extent of the Education Department’s authority now, but perhaps we’ll focus cancellation efforts on borrowers who we think we’re going to have trouble collecting from. Maybe they’ve been paying for 25 or 30 years, or they’re above a certain age. I can imagine a number of these categories.
Has the White House asked you for advice?
No.
If they did, would you tell the people there that “I told you so” about the fact that they maybe should have tried this compromise and settlement tactic first?
I think a wiser decision would have been to start canceling debt without requiring any application from debtors, and then challenging the court to reimpose the balances.
Where I think we all agree is that the court is skeptical of any assertion of administrative authority, so you have to think around that, rather than just thinking about how to convince them.
Several years ago, you wrote the following in a Roosevelt Institute report: “The lack of a determinate answer in existing law should be seen as an opportunity, not an obstacle.”
But don’t we, as of the recent debt cancellation ruling, effectively have a determinate answer as to how the Supreme Court would rule in what would probably be an inevitable lawsuit over any reading of the Higher Education Act like the one you’ve just described? I mean, why even bother trying?
My sense is that Biden wants to at least partially run for re-election on this and be a little confrontational with the court and claim that what it did was illegitimate and so we’re trying to do it again. Political pressure during the campaign and ongoing investigations into the Supreme Court might make the court more hesitant.
But even if they lose again, there are then precedents. Many members of Congress are running on the wisdom of student debt cancellation in their campaigns. The more that these things become part of the Democratic Party, the more likely we are to get better legislative actions.