Legal Scholar: Biden’s Attempt to Save Student Debt Bailout From Court Challenges Won’t Work

The Biden administration’s abrupt change of course in its federal student loan debt “forgiveness” scheme is not going to help keep challengers out of court, said legal scholar GianCarlo Canaparo.

“It went wrong from the very start,” Canaparo, a senior legal fellow at conservative think tank Heritage Foundation, said in an interview with NTD News. “[President Joe Biden] has pinned this to the COVID-19 emergency, although he has just said we are no longer in a pandemic.”

The U.S. Education Department is planning to “forgive” up to $20,000 in federal student loan debt for eligible borrowers. It was originally expected to cover about 43 million Americans, but the department announced last week that privately held loans will be excluded from the relief plan.

According to the latest estimate from the department, the price tag of the plan now stands at about $30 billion each year over the next 10 years. The Congressional Budget Office, a nonpartisan research arm of the Congress, previously estimated that the one-time relief would cost $400 billion of taxpayers’ money over 30 years.

The decision to cut out potentially millions of people from the plan, Canaparo said, shows that the debt cancellation wasn’t about supporting Americans who have suffered financial harm from the COVID-19 pandemic in the first place.

“It only proves that this has nothing to do with the pandemic,” Canaparo told NTD. “The moment that the Biden administration noticed that there were some people who might get into court, it stopped and said that it won’t forgive a certain segment of loans, because it thinks that will keep the challengers out of court.”

The attorneys general of six Republican-led states—Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina—have filed a lawsuit (pdf) seeking to block the plan, which they argue would cause economic harm to their states. Canaparo said the states’ legal standing appears to be solid.

“I think this suit has some legs,” he said, noting that the states must be able to prove that Biden’s action would cause them a concrete injury that the court has the power to fix. “In this case, the states actually have some very good arguments—a lot.”

“Many states operate as loan servicers to federal debt, which means that every time the Biden administration changes these programs or forgive some debt, they lose money,” Canaparo explained. “That money is invested in the states through bond programs and other sorts of financial incentive structures. So, the states will suffer a concrete harm on account of this.”

Those states, according to Canaparo, would still suffer economically even if the Biden administration only cancels federal student loans held by the federal government.

“It’s an attempt by the Biden administration to keep the states out of court, but it’s not going to work as my sense,” he said.

When it comes to the legality of Biden’s action, Canaparo said Biden and Cardona don’t have the authority they claimed to have under what is known as HEROES Act, a 2003 higher education law created in response to the Iraq war.

“The President is trying to use an emergency powers provision that was created to give temporary relief to soldiers fighting abroad after 9/11,” he told NTD, noting that Biden and Cardona are unlawfully exceeding the scope of the HEROES Act when they offer a blanket relief to potentially millions of people who don’t qualify. “It is really an abuse of emergency power.”

“This is a political gift that people on the left have been clamoring for since 2011, and Biden has finally delivered,” he continued. “That’s what this is about. It’s politics. And the administration is pretending that it is necessary for the pandemic, but it just isn’t.”