The Supreme Court's June 30, 2023 decision in Biden v Nebraska, Case No. 22-506, disappointed thousands of student loan recipients by striking down the Secretary of Education’s decision to forgive $430 billion of those loans. Their reaction was understandable. Less understandable was the frenzied response of certain politicians and pundits. After all, the Court did not hold that student loans could not be forgiven. The Court held that, if they were to be forgiven, the law required Congress to do the forgiving. Not the Secretary of Education. Thus, properly understood, the case was about the Constitution’s delegation of powers between the legislative and executive branches. Although, interestingly, the Court’s opinion pointed out that no less a “progressive” than former Speaker of the House, Nancy Pelosi, agreed with its ultimate conclusion.
As then-Speaker of the House Nancy Pelosi explained, “People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”
Student loans are covered by Title IV of the Higher Education Act of 1964. The Act authorizes the Secretary of Education to cancel or reduce loans in certain limited circumstances. For example, loans held by public servants may be cancelled. Loans taken by students who later become disabled may be cancelled. The loans of borrowers who become bankrupt may be forgiven. However, the Secretary of Education, in cancelling $430 billion in student loans, did not rely on any of the provisions of the Act. Instead, the Secretary relied on a different statute, passed shortly after 9-11 and known as the HEROES Act, which permits the Secretary to “modify or waive” student loan requirements during national emergencies. Thus, the question before the Court was whether cancelling $430 billion dollars in student loans was a modification or waiver. The Court noted the word “modify” was inadequate to cover the Secretary’s actions. Colorfully adding, “The Secretary’s plan has modified the cited provisions only in the same sense that the French Revolution modified the status of the French nobility – it has abolished them and supplanted them with a new regime entirely." Neither could the forgiveness be properly characterized as a “waiver” because the Act did not address loan repayment. Put differently, the question was not whether something could or should be done about student loan balances. The question was who had authority to do it. The Court concluded that, under our Constitution, the “who” was Congress, not the executive branch, at least not under the HEROES Act.
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