Legal advice does not necessarily bind the Biden administration, which may reverse or alter its interpretation of the laws governing federal student loans. But the memo comes at a time when President-elect Joe Biden is already signaling that he will not accept the growing progressive demands that he employ executive measures to cancel student loan debt.
The document was signed on Tuesday night by Reed Rubinstein, who is serving as acting interim general counsel for the Department of Education. It was first reported by the Wall Street Journal.
Rubenstein addressed the memo to Education Secretary Betsy DeVos, although she resigned last Friday following a pro-Trump crowd that violently attacked the Capitol. Rubinstein writes that DeVos had asked his office to “memorize” the department’s legal view on the issue of student loan forgiveness.
DeVos had previously called Democrats’ proposals to cancel student loan debt “crazy.” In his farewell letter to Congress earlier this month, DeVos urged lawmakers to reject pressure from the new government to cancel student loan debt.
Pressure of Democrats: Some Democrats, including Senator Chuck Schumer (DN.Y.), who will become the Senate majority leader next week, have asked Biden to cancel up to $ 50,000 in federal student loan debt per borrower. “You don’t need Congress,” he said in December. “All you need is a pen move.”
During the campaign, Biden endorsed $ 10,000 in canceling student loans as an immediate response to the coronavirus pandemic. But he has signaled in recent weeks that he sees this as a legislative, not an executive, priority.
A senior economic adviser to Biden said on Friday that Biden wants Congress to act on the proposed loan forgiveness, although the next government unilaterally extends the pause on most federal student loan payments and interest in the midst of the pandemic. . Biden also said last month that it is “unlikely” to seek forgiveness of the student loan through executive action.
A Democrat-controlled Senate could use a tool known as budgetary reconciliation to approve widespread forgiveness of student loans with a simple majority of votes. The Obama administration used the tool in 2010 to make radical changes to the federal student loan system, including the elimination of federal guarantees for private creditors.
But it is not yet clear whether Democrats will move forward with budgetary reconciliation or how much support there is in the caucus, especially among the more moderate members, for the widespread cancellation of student loans.
Last year, House Democrats initially proposed up to $ 10,000 in student loan forgiveness per borrower as part of their Covid relief proposal, although Democratic leaders have significantly reduced the proposal amid price concerns.
Separately, the House last year passed an amendment to the annual defense policy bill that would have canceled up to $ 10,000 in private student loan debt, although it did not survive negotiations with the Republican Party-controlled Senate widespread loan forgiveness. The amendment won some votes from the Republican Party in the House, although some moderate Democrats voted against it.
Senator Elizabeth Warren (D-Mass.), Who is among the progressives who push for Biden’s cancellation, was the first Democratic presidential candidate last year to advocate for policy adoption through executive action. Her campaign released a legal memo written by the Harvard Law School Project on Predatory Student Loan, which set out a path for the Department of Education to unilaterally settle large amounts of debt.
The legal opinion published by the Trump administration on Wednesday is effectively a refutation of the legal arguments, which were widely adopted by progressives. The memo also seeks to explain that the various executive actions of the Trump administration in 2020 to provide relief to borrowers – all taken without Congress – have been limited in scope and do not open the door to widespread debt relief.
Supporters of the widespread cancellation of student loans have argued that the Trump administration has set a precedent – if not legal, then political – for Biden to use executive action to cancel loans.
The memo says that last year, DeVos “considered his authority to provide mass cancellation or coverage”, as the government sought to provide relief for student loans during the pandemic, but that the Department of Education, in consultation with the Department of Justice, “concluded that it would have no statutory authority to do so.”
Looking at the HEA: Progressives cited a part of the Higher Education Act – section 432 – which discusses the Department of Education’s power to “pledge” and “settle” student loan debt as the primary way in which they expect the Biden government to cancel student loan debt .
The Department of Education and the White House said earlier that the Trump administration invoked this law as part of its executive actions to provide relief from the pandemic for student borrowers.
Angela Morabito, a department spokeswoman, told POLITICO last year that the agency had used section 432 of the Higher Education Act to unilaterally suspend interest on federal student loans.
“The secretary exercised her authority under Sec. 432 (a) (6) of the Higher Education Act to allow a temporary waiver of interest based on the unique and special facts presented by the interruption of the COVID-19 pandemic and the resulting Emergency statement National by the President, “Morabito said in an email last August.
White House press secretary Kayleigh McEnany also cited the law as giving the Department of Education “broad” powers to take action on student loans during a press conference on August 10.
The latest memo from the Trump administration seems to admit that the Department of Education relied on section 432 to forgive interest on certain federal loans last March for several weeks before the CARES Act went into effect. But the memo, in a footnote, describes this action as the “very external limit on its authority”.
This part of the Higher Education Act “is best interpreted as a limited authorization for the Secretary to provide cancellation, compromise, waiver or pardon only on a case-by-case basis and only under circumstances specified by Congress,” the memo states.