The Justice Department defended the Biden administration’s plan to cancel millions of dollars in federal student loan debt to the Supreme Court this week, saying the initiative falls “comfortably” within the law.
In the filing late Wednesday, the Justice Department insisted Education Secretary Miguel Cardona’s order formalizing the writeoff was covered under the federal HEROES Act passed two decades ago.
The DOJ lawyers argued that Republican-led states and two Texas-based advocacy groups that are contesting the loan forgiveness program lack standing and the plan passes legal muster.
“On the merits, respondents challenge the Secretary’s plan as exceeding his statutory authority, arbitrary and capricious, and procedurally improper. Each contention is wrong,” the filing said.
“The plan falls squarely within the plain text of the HEROES Act; indeed, a central purpose of the statute is to authorize the Secretary to grant student-loan-related relief to at-risk borrowers because of a national emergency—precisely what the Secretary did here,” it continued.
The HEROES Act, or the Higher Education Relief Opportunities for Students Act, was signed by President George W. Bush in 2003 and allows Cardona to respond to financial issues during a national emergency.
It reiterated the arguments previously made by the Biden administration that the COVID-19 pandemic constitutes such an emergency.
The brief noted that former President Donald Trump declared a national emergency in March 2020 because of the pandemic and that then-Education Secretary Betsy DeVos invoked the act that same month when she suspended student loan payments.
That pause has since been extended multiple times.
Cardona “examined the available economic and historical data and tailored the relief to the relevant statutory objective: ensuring that borrowers affected by the pandemic would not be in a worse position financially with regard to their student-loan obligations,” the brief said.
The Justice Department added that Cardona looked at the potential financial problems caused by the pandemic, including overall economic damage, layoffs, inflation and rising delinquency rates, in making his decision.
“The evidence further showed that, without the proposed relief, those borrowers would likely experience default and delinquency rates beyond pre-pandemic levels,” the court documents say.
As for the states saying they would be financially harmed by the plan, the Justice Department dismissed that out of hand.
“Virtually all federal actions — from prosecuting crime to imposing taxes to managing property — have some incidental effects on state finances,” the DOJ said. “If such incidental effects suffice for standing, every State would have standing to challenge almost any federal policy.”
The Biden administration announced the plan in August to cancel up to $10,000 in student loan debt for individuals making less than $125,000 per year or households making under $250,000 per year in income.
Pell Grant recipients, who typically demonstrate more financial need, would get up to $20,000 in debt forgiven.
But lower courts blocked it after the states challenged the proposal.
The Supreme Court has scheduled February arguments to hear the case.