Stephanie Scarbrough/AP Photo
President Joe Biden delivers remarks during a campaign event with Vice President Kamala Harris in Raleigh, North Carolina, March 26, 2024.
When the Biden administration introduced a mass student debt relief program, the main argument from the conservative attorneys general opposing it was that it was novel. No administration had used the HEROES Act to cancel student debt, though the legislation explicitly enables the education secretary to “waive or modify” student loan payments in the statute. That element of newness forms the backbone of the so-called “major questions” doctrine, which alleges that applications of statute that have large effects need to be more directly defined and authorized.
Last week, many of the same conservative attorneys general filed another suit against another Biden administration student loan plan. But this one is not new; it’s the administration’s version of a program that has been in place for over 30 years, and was initiated by a Republican president. If the Supreme Court agrees to throw out this Biden program, they’ll have made the subtext text: Democratic regulations of any kind, whether new interpretations or variations on long-settled public policy, are presumptively illegal.
The lawsuit, pursued by 11 red states led by notorious Kansas Attorney General Kris Kobach, asserts that Joe Biden is attempting to “avoid Congress and pass an illegal student debt forgiveness” for a second time. The target here is called Saving on a Valuable Education, or SAVE. This is the administration’s revision of income-driven repayment (IDR), something that five previous presidents have used. IDR’s intellectual foundations date back to 1955 and none other than a conservative hero, the economist Milton Friedman. The first IDR program was a pilot in 1992, under President George H.W. Bush; it was put into statute with amendments to the Higher Education Act in 1993.
Under this program, student loan repayments are based on a percentage of the income of the borrower. Those making low wages would pay a small amount, and those with a high salary would pay much more. After a set period of time (in prior programs, it has been 20 or 25 years), any remaining balance would be forgiven. In the actual statute, it’s called “income contingent repayment,” authorizing the education secretary to gather student debtors’ income information, and establishing rules to collect a percentage of that income monthly, notify borrowers of this opportunity, and forgive remaining balances at the end of the payment period.
Again, this basic structure has endured for 30 years and five presidents. It has changed substantially over time, with changes to the percentages of income used for repayment, or different time periods to become eligible for forgiveness. Neither the conservative legal establishment nor any of these 11 states had any serious complaints about it, until now.
The Biden administration’s revision of IDR is definitely pretty generous, as the Prospect has explained. SAVE cuts the percentage of income that goes to monthly payments from 10 to 5 percent, and raises the threshold of exempted income to 225 percent of the poverty line, setting the payment for someone making around $30,000 a year at $0. Forgiveness on a small loan of under $12,000 kicks in at ten years, rising gradually to 20 years for larger loans.
Income-driven repayment has over three decades of history behind it, and a crystal-clear statutory mandate.
Incidentally, SAVE was not, as some gullible media outlets have reported, a “response” from the White House to losing the mass debt cancellation case. The program was announced in January 2023, nearly six months before the Supreme Court’s ruling. There is an actual response to the Supreme Court, a negotiated rulemaking that would enable some debt relief. That’s not what the Republicans are going after in this case; they’re attacking a rule proposed 15 months ago that’s just a revision of a broad statutory mandate enshrined 31 years ago.
Since SAVE launched last August, about 7.5 million borrowers have enrolled. The Biden administration has allowed borrowers who enrolled and had already made ten years of payments for loans of $12,000 and less to immediately qualify upon enrollment for debt forgiveness, affecting about 153,000 people and $1.2 billion in relief.
The Republican AGs’ argument against SAVE is confusing. It first says that the rule and cost estimate for debt relief under SAVE was incorrect because it assumed that the previous mass debt forgiveness under the HEROES Act would have taken effect. This seems like a strange reason to invalidate an IDR program; it suggests that the Biden administration was at fault for not having a time machine to go back and rewrite the rule based on the Supreme Court’s order. (The Congressional Budget Office provided the cost estimate in the event that the mass debt forgiveness was invalidated, so that information was available.) There need not be any linkage between a mass student debt cancellation program and revised rules for an existing IDR program; that is invented by the Republican AGs.
Then the AGs have a problem with the 153,000 people getting their loans forgiven under SAVE for time served. If this is indeed a problem, the solution would presumably be to roll back the debt forgiveness for those 153,000, not invalidate the entire rule. But of course, the latter is what the AGs are seeking.
Then there’s a bit of umbrage-taking at the administration’s defiant rhetoric over using the existing statutes to confer debt relief. “The Supreme Court blocked it. They blocked it. But that didn’t stop me,” Biden said at a press event. Do Republican AGs really want to use rhetorical flourish as evidence in a court case, given their presumptive nominee for president?
Finally, we get to the substance, with the AGs claiming that there is no “substantive limit” to modifying IDR. This is the part where Republicans try to use the law to set up fake boundaries for regulations that are clearly spelled out in statute. Congress said specifically, over 30 years ago, that the Education Department must present a program “with varying annual repayment amounts based on the income of the borrower, paid over an extended period of time prescribed by the Secretary, not to exceed 25 years.” Congress did not say that the secretary can’t get too generous with it, or forgive too much debt. The language is plain and clear. Indeed, the only limitation is that the repayment period can’t be too long. Republicans just want to give friendly judges the chance to rewrite that.
Then there is the question of standing. How do these Republican AGs say their states are harmed by the new IDR program, and hence eligible to file this lawsuit? Incredibly, they say that their offices will be unable to “recruit and retain talent,” because they will no longer have the advantage of the Public Service Loan Forgiveness program, which allows student borrowers who work in the public sector to have their loans canceled within ten years. This is maddening if you think for two seconds about the parameters of the program. Only people with $12,000 in debt get forgiveness after ten years under SAVE. Lawyers and paralegals in state attorney general offices don’t necessarily fit that paradigm, and if they’re saying they pay their workers $30,000 or less, then we have a much bigger scandal than the Biden administration’s debt forgiveness program.
Not to mention the fact that these AGs are attempting to stop a loan forgiveness program by pointing to a different loan forgiveness program, one which the Biden administration has managed to make minimally functional.
But fundamentally, the idea that state attorneys general are harmed when federal debt forgiveness is expanded beyond their own employees is nuts. They could just as easily claim standing to sue when someone sets up a scholarship for low-income law students. After all, those students won’t have tremendous debt burdens!
You may remember that the Supreme Court gave standing to those attempting to invalidate the mass student debt cancellation program on the basis of the Missouri Higher Education Loan Authority (MOHELA), a student loan servicer with tangential-at-best ties to the state, which definitively wanted no part of the lawsuit. The state of Missouri is not currently a party to this lawsuit, but Missouri’s attorney general Andrew Bailey says his state’s lawsuit is coming. So the same dragooning of a servicer into the case will likely ensue, something the Court lawlessly assented to last time.
But agreeing with the Republican AGs in this case would be quite a step further. Income-driven repayment has over three decades of history behind it, and a crystal-clear statutory mandate. It was enacted through the normal notice-and-comment administrative procedures (one of the complaints in the lawsuit is that the Education Department didn’t give commenters an extension to the public comment period, as if that’s a legal requirement). If the Supreme Court (which is where this will eventually end up) finds this to be an overstep of executive branch rulemaking, there will in reality be only one reason: A Democrat tried to do it.
This has major implications for governing more generally, if only one party’s rules are allowable. It’s an example of the runaway power of the judiciary over American life, and what will continue if nothing is done.
