Student Borrowers Deserve Solutions, Not More Legal Battles

Last week, the Department of Education announced it will take the “next step toward additional debt relief” for student loan borrowers. In particular, they said they would begin to notify borrowers of potential debt relief – based on a proposed rule – and give borrowers until August 30th to opt out of potential relief.

This action is unusual, especially given that the Department has not yet released a finalized debt cancellation rule and so borrowers cannot know exactly what they might be opting out of. It is possible this advanced action is part of an attempt to quickly administer debt cancellation before any legal challenge can be brought forward, and – through the opt-out – weaken legal claims of standing from plaintiffs.

If the proposed rule is finalized without changes, it would cost the federal government roughly $150 billion, according to recent estimates. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

It’s bad enough that the White House is pursuing costly new efforts to cancel student debt. They should not be actively evading potential legal challenges in an effort to circumvent the law.

The President’s latest debt cancellation proposal is expensive, poorly targeted, bad for higher education cost and quality, and it may well be illegal.

The courts have already ruled one of the Administration’s debt cancellation actions to be illegal and put a stay on another one. Trying to slip a third effort past the courts would set a dangerous precedent and could allow the executive branch to spend with impunity. Trying to circumvent Congress and the courts is not the way to govern.

The Administration has already implemented or begun to implement over $600 billion of student debt cancellation and is trying to roll out $220 to $750 billion more. Combined, that’s more than all nominal federal higher education spending in the nation’s entire pre-pandemic history.

With debt approaching record levels and interest costs now larger than Medicare or defense, now is not the time for new borrowing – legal or otherwise.

Instead of focusing on how to make an end-run around the Supreme Court, the White House should be working with Congress on a set of reforms to actually reduce college costs and improve quality and accountability. The House’s College Cost Reduction Act and the Senate’s Lowering Education Cost and Debt Act would be good places to start.

Instead of these one-time attempts to thwart Congress and the courts, we need real sustainable solutions to fix our higher education system and reduce our budget deficits.

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For more information, please contact Matt Klucher, Assistant Director for Media Relations, at klucher@crfb.org.