Comments on the Department of Education’s Proposed Student Debt Relief Rules

Washington, DC, December 20, 2024 (GLOBE NEWSWIRE) — Today, at the request of the New Civil Liberties Alliance, the U.S. Department of Education announced the withdrawal of proposed rules that, taken together, would have resulted in the unconstitutional loss of more than $250 billion in federal student aid would be loan debts to the Ministry of Finance. The NCLA had submitted comments in May 2024 and again in December calling on the Department to abandon these plans, noting that Congress has repeatedly refused to pay off such debts and the Department lacks the legal authority to do this unilaterally. NCLA celebrates this important victory in preventing abuse of executive power.

The department’s proposals, released in April and October, would have cut hundreds of billions of dollars at taxpayer expense. The first plan included a wide range of loan cancellation proposals, the total size of which, according to the ministry’s estimates, was nearly $150 billion. The second plan would have eliminated at least $112 billion for borrowers the department deemed “distressed” based on a 17-factor test the department invented out of thin air.

Despite the withdrawal of these plans, the department still maintains that a section of the Higher Education Act of 1965 gives the Secretary of Education full authority to cancel all federally held student loan debt. But the law has never been used to broadly cancel student loan debt owed to taxpayers, cannot be clearly understood in that sense, and has never been understood in the past to permit such an action. The government’s inaccurate interpretation of the law would have made other existing loan forgiveness programs completely unnecessary. The Supreme Court’s major issues doctrine, which prohibits federal agencies from resolving matters of “significant economic and political importance” without express authorization from Congress, prohibits the department’s proposals. The withdrawn plans would also have violated the budget and vesting clauses of Article I of the Constitution, which reserves all legislative and budgetary powers to Congress. The NCLA will continue to hold the Department accountable for such schemes that go far beyond its legal authority.

NCLA released the following statement:

“The Department has repeatedly attempted to illegally cancel student loans for years, with courts stopping each of these programs. We are pleased that the Department has finally learned its lesson and is withdrawing these two recent unlawful loan cancellation schemes.”
— Sheng Li, Legal Counsel, NCLA

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