Student debt has become an economic force representing roughly $1.77 trillion dollars, at the time of this writing. In a previous article, I discussed the items that collectively make up the Biden-Harris Student Debt Relief Plan that has been announced by both the Biden-Harris administration and the Department of Education. The approach takes aim at several aspects of student loan management in order to reduce the overall student debt burden for borrowers. The items are: cancellation of a capped, monetary amount of borrowers’ loan principle, extension of the student debt payment moratorium, and an executive branch proposal to the Department of Education to create more lenient criteria for borrowers to both mitigate repayment and access full debt forgiveness after a set number of payments.
Given the numerous updates to the student loan program under this proposed plan, it is natural to question both how and why the Secretary of Education is pursuing the action to increase student debt relief, at this time. This article will dive into those questions to gain a better understanding of why this plan is being pursued.
Let’s walk through the Department of Education’s legal justification for initiating its student debt forgiveness action via the Heroes Act. While perusing the Department of Education website to locate additional information on student loan forgiveness, I found this August 2022 Department of Education memorandum addressed to Miguel A. Cardona, Secretary of Education, from Lisa Brown, General Counsel within the U.S. Department of Education, Office of the General Counsel. This document broadly lays the foundation of the authority held by the Secretary of Education to execute the Biden-Harris Student Debt Relief Plan. The key documents addressed in this letter are:
- August 2022 Department of Education, Office of General Counsel Memorandum (linked above)
- August 2022 Department of Justice, Office of Legal Counsel Memorandum
- Higher Education Relief Opportunities for Students (“HEROES”) Act of 2003
- January 2021 Department of Education Memorandum (to Betsy DeVos, from acting Principal Deputy General Counsel)
- 20 U.S.C. § 1098bb (Title 20 of the United States Code, Section 1098bb)
- 20 U.S.C. § 1098ee (Title 20 of the United States Code, Section 1098ee)
- 5 U.S.C. § 552(a) (Title 5 of the United States Code, Section 552a
Administrative Clap Back on Student Debt
The August 2022 Dept. of Ed. Memorandum is a response to the January 2021 Dept. of Ed. Memorandum. The Jan. 2021 memorandum makes an attempt to interpret the HEROES Act in a way that limits the authority of the Sec. of Ed. to forgive principal amounts associated with student loan debt. The Aug. 2022 memorandum gave rebuttal to the case made by the Jan. 2021 memorandum and provided justification for the authority of the Sec. of Ed. to enact the Biden-Harris Student Debt Relief Plan.
Let’s take a look at the timeline of events to understand what’s happening, here.
Timeline of Events for Student Debt Relief Action Based on Heroes Act
- March 25, 2003
- A representative from the House of Representatives presents Bill H.R.1412 – the Higher Education Relief Opportunities for Students Act of 2003 – to the general body.
- April 1, 2003
- U.S. House of Representatives passes Bill H.R.1412 – Higher Education Relief Opportunities for Students Act of 2003.
- July 31, 2003
- A senator presents Bill H.R.1412 – Higher Education Relief Opportunities for Students Act of 2003 to the Senate Committee on Health, Education, Labor, and Pensions. This committee discharges consideration in favor of immediate presentation to the entire U.S. Senate. Subsequently passed by the U.S. Senate.
- August 7, 2003
- Congress presents Bill H.R.1412 – Higher Education Relief Opportunities for Students Act of 2003 to the U.S. President.
- August 18, 2003
- U.S President signs Bill H.R.1412 – Higher Education Relief Opportunities for Students Act of 2003, creating Public Law 108-76, 20 U.S.C § 1098aa – 20 U.S.C. § 1098ee (U.S. Code ref.).
- January 12, 2021
- Dept. of Ed., Off. of Gen. Counsel sends memorandum to then Sec. of Ed. Betsy Devos stating that the position of Sec. of Ed. does not have the authority to enact mass forgiveness of student loan debt, by law based on consultation with Dept. of Justice, Off. of Legal Counsel. The Federal register contains a published version of this memo.
- August 23, 2022
- Dept. of Ed., Off. of Gen Counsel sends memorandum to current Sec. of Ed. Miquel Cardona stating that the position of Sec. of Ed. does have the authority to enact mass forgiveness. The Biden-Harris Student Debt Relief Plan outlines the current, proposed forgiveness. The Federal Register has a published version of this memo.
- Dept. of Justice, Off. of Legal Counsel submits a memo corroborating the memo sent by the Off. of Gen. Counsel. The Office of Legal Counsel submitted this memo to be published in the Federal Register.
Wait… What?
You read those last two bullet points correctly. Within roughly one and one half years, the same two legal organizations flipped their stance on the Secretary of Education’s authority to enact student loan forgiveness on a massive scale.
I list the government positions held, by date, in the following table.
| Jan. 12, 2021 | Aug. 23, 2022 | |
| President of the United States | Donald Trump | Joseph Biden |
| Secretary of Education | Betsy Devos | Miguel Cardona |
| Gen. Counsel, Off. of General Counsel | Reed Rubinstein (acting) | Lisa Brown |
| Attorney General | Jeffrey A. Rosen (acting) | Merrick Garland |
| Asst. Atty. Gen., Off. of Legal Counsel | Steven Engel | Christopher Schroeder |
As we can see from the table above, all relevant positions were held by different representatives on the dates related to the opposing memoranda. Why do these current and former government representatives come to differing conclusions about the same sets of laws?
Student Debt… From a Certain Point of View…
Unfortunately, Obi-Wan Kenobi will not be able to help us out of this conundrum. Although, by the time I had read through a good deal of the legal documentation that underpins this issue, I did start to feel as though someone was trying to pull a Jedi Mind Trick on me. With that said, the entire argument can be reduced to how differently both camps both define and interpret the words “waive” and “modify” in the context of both the HEROES Act and the number of borrowers targeted for student debt forgiveness.
Next, let’s look at the section of the law that is being hotly debated. Namely, “20 U.S.C. § 1098bb. Waiver authority for response to military contingencies and national emergencies”. In particular, we are interested in 20 U.S.C. § 1098bb(a)(1) and 20 U.S.C. § 1098bb(a)(2). These read as follows:
§ 1098bb. Waiver authority for response to military contingencies and national emergencies
20 U.S.C. § 1098bb(a)(1) and 20 U.S.C. § 1098bb(a)(2)
(a) Waivers and modifications
(1) In general
Notwithstanding any other provision of law, unless enacted with specific reference to this section, the Secretary of Education (referred to in this part as the ‘‘Secretary’’) may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the Act [20 U.S.C. 1070 et seq.] as the Secretary deems necessary in connection with a war or other military operation or national emergency to provide the waivers or modifications authorized by paragraph (2).
(2) Actions authorized
The Secretary is authorized to waive or modify any provision described in paragraph (1) as may be necessary to ensure that—
(A) recipients of student financial assistance under title IV of the Act who are affected individuals are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals;
(B) administrative requirements placed on affected individuals who are recipients of student financial assistance are minimized, to the extent possible without impairing the integrity of the student financial assistance
programs, to ease the burden on such students and avoid inadvertent, technical violations or defaults;
(C) the calculation of ‘‘annual adjusted family income’’ and ‘‘available income’’, as used in the determination of need for student financial assistance under title IV of the Act for any such affected individual (and the determination of such need for his or her spouse and dependents, if applicable), may
be modified to mean the sums received in the first calendar year of the award year for which such determination is made, in order to reflect more accurately the financial condition of such affected individual and his or her family;
(D) the calculation under section 484B(b)(2) of the Act (20 U.S.C. 1091b(b)(2)) of the amount a student is required to return in the case of an affected individual may be modified so that no overpayment will be required to be returned or repaid if the institution has documented (i) the student’s status as an affected individual in the student’s file, and (ii) the amount of any overpayment discharged; and
(E) institutions of higher education, eligible lenders, guaranty agencies, and other entities participating in the student assistance programs under title IV of the Act that are located in areas that are declared disaster areas by any Federal, State or local official in connection with a national emergency, or whose operations are significantly affected by such a disaster, may be granted temporary relief from requirements that are rendered infeasible or unreasonable by a national emergency, including due diligence requirements and reporting deadlines.
The law states that, “…the Secretary of Education (referred to in this part as the ‘‘Secretary’’) may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the Act [20 U.S.C. 1070 et seq.] as the Secretary deems necessary in connection with a war or other military operation or national emergency to provide the waivers or modifications authorized by paragraph (2).”
When we look at the authorizations in paragraph two of this law’s text, we see it states that the Secretary of Education has the authority to “waive or modify any provision described in paragraph (1)”. Paragraph (1) of of the text specifies both statutory and regulatory provisions. Additionally, paragraph (2) of the text lists reasons for which the Secretary of Education should leverage this authority. Specifically, the Secretary of Education should use this legal allowance “as may be necessary to ensure that— (A)… affected individuals are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals; (B) administrative requirements placed on affected individuals who are recipients of student financial assistance are minimized… without impairing the integrity of the student financial assistance
programs… (C) the calculation of ‘‘annual adjusted family income’’ and ‘‘available income’’, as used in the determination of need for student financial assistance under title IV of the Act…”
The Biden-Harris administration argues that the COVID-19 national emergency gives them the authority to forgive student debt under the provisions of the Heroes Act. They claim that all student loan borrows have been adversely affected by the national emergency to the extent that principal forgiveness is necessary.
The Trump-Pence administration’s opinion details their opposition. It states a far too broad interpretation and application of the Heroes Act. They further suggest that the Biden-Harris forgiveness action is not specifically targeted, and that the Heroes Act was never meant for broadly sweeping forgiveness action for all borrowers. This is argued to be an action that could impair the integrity of the student financial assistance programs.
A challenge to the Biden-Harris Student Debt Relief Plan was presented to the Supreme Court of the United States. In the next article of this series, I’ll explore the result of the Supreme Court’s decision on the relief plan.