6/30/2023: Supreme Court Strike Down Student Loan Forgiveness Plan
$430b loan forgiveness program reverted
The Supreme Court has ruled that the pervasive student loan forgiveness program cannot go forward, ending the $430 billion program that affects 40M Americans.
The 6-3 decision by Chief Justice John Roberts said the Education Secretary exceeded his authority to “waive or modify” the student loans in such a pervasive way. The following is the critical paragraph from the decision:
The text of the HEROES Act does not authorize the Secretary’s loan forgiveness program. The Secretary’s power under the Act to “modify” does not permit “basic and fundamental changes in the scheme” designed by Congress. MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U. S. 218, 225. Instead, “modify” carries “a connotation of increment or limitation,” and must be read to mean “to change moderately or in minor fashion.” Ibid. That is how the word is ordinarily used and defined, and the legal definition is no different. The authority to “modify” statutes and regulations allows the Secretary to make modest adjustments and additions to existing provisions, not transform them. Prior to the COVID–19 pandemic, “modifications” issued under the Act were minor and had limited effect. But the “modifications” challenged here create a novel and fundamentally different loan forgiveness program. While Congress specified in the Education Act a few narrowly delineated situations that could qualify a borrower for loan discharge, the Secretary has extended such discharge to nearly every borrower in the country. It is “highly unlikely that Congress” authorized such a sweeping loan cancellation program “through such a subtle device as permission to ‘modify.’” Id., at 231. The Secretary responds that the Act authorizes him to “waive” legal provisions as well as modify them—and that this additional term “grant[s] broader authority” than would “modify” alone. But the Secretary’s invocation of the waiver power here does not remotely resemble how it has been used on prior occasions, where it was simply used to nullify particular legal requirements. The Secretary next argues that the power to “waive or modify” is greater than the sum of its parts: Because waiver allows the Secretary “to eliminate legal obligations in their entirety,” the combination of “waive or modify” must allow him “to reduce them to any extent short of waiver” (even if the power to “modify” ordinarily does not stretch that far). But the challenged loan forgiveness program goes beyond even that. In essence, the Secretary has drafted a new section of the Education Act from scratch by “waiving” provisions root and branch and then filling the empty space with radically new text. The Secretary also cites a procedural provision in the HEROES Act directing the Secretary to publish a notice in the Federal Register, “includ[ing] the terms and conditions to be applied in lieu of such statutory and regulatory provisions” as the Secretary has waived or modified. §1098bb(b)(2). In the Government’s view, that language authorizes both “waiving and then putting [the Secretary’s] own requirements in”—a sort of “red penciling” of the existing law. But rather than implicitly granting the Secretary authority to draft new substantive statutory provisions at will, §1098bb(b)(2) simply imposes the 4 BIDEN v. NEBRASKA Syllabus obligation to report any waivers and modifications he has made. The Secretary’s ability to add new terms “in lieu of” the old is limited to his authority to “modify” existing law. As with any other modification issued under the Act, no new term or condition reported pursuant to §1098bb(b)(2) may distort the fundamental nature of the provision it alters. In sum, the Secretary’s comprehensive debt cancellation plan is not a waiver because it augments and expands existing provisions dramatically. It is not a modification because it constitutes “effectively the introduction of a whole new regime.” MCI, 512 U. S., at 234. And it cannot be some combination of the two, because when the Secretary seeks to add to existing law, the fact that he has “waived” certain provisions does not give him a free pass to avoid the limits inherent in the power to “modify.” However broad the meaning of “waive or modify,” that language cannot authorize the kind of exhaustive rewriting of the statute that has taken place here. Pp. 13–18.
I asked my family in Taiwan what they think of the student loan forgiveness program. They are shocked by why the US allows students to take up such a big amount of loans in aggregate and why the government plans to forgive the student loans using debt. Taiwan is a small place and honestly doesn’t have the luxury to print money irresponsibly like America. Taiwan’s debt to GDP is 30% in 2021 and they have to keep it at this level to maintain their currency TWD. The student loan forgiveness program is very controversial and sparks a big cultural war that I don’t want to get into. But I believe the biggest culprit is actually the educational institutions that fleece the students. If America doesn’t figure out a way to stop the Big Higher Ed from saddling students with an enormous amount of debt, the forgiveness program is just treating symptoms rather than the cause and will only give the Big Higher Ed more excuses to charge students even more ridiculous amounts of money for attending college.