Supreme Court should hear challenge to student loan relief
The Biden administration canceled tens of billions of more dollars in student debt earlier this month on the sly by extending its payment and interest moratorium for the umpteenth time. Who knows if or when borrowers will have to make payments again.
On Nov. 18 the Justice Department asked the Supreme Court to lift an Eighth Circuit Court of Appeals injunction on the administration’s half-atrillion-dollar write-off or hear the case on expedited review. Now the U.S. Department of Education is extending its pandemic payment pause through next August or until the high court rules on the case — or so it says.
“It isn’t fair to ask tens of millions of borrowers who are eligible for relief to resume their student debt payments while the courts consider the lawsuit,” President Joe Biden said.
So the payment pause that the administration earlier claimed was needed to give borrowers time to prepare to make payments is now needed so they can prepare … not to make payments.
Congress initially paused payments and interest accrual on student loans in March 2020 amid government lockdowns. The “forbearance” was supposed to expire on Sept. 30, 2020, but the Trump and Biden administrations have extended it again and again. The Biden administration keeps claiming this will be the last extension, only to provide another.
The administration last extended the moratorium through December when it announced its student loan write-off in August. Few borrowers needed it. The unemployment rate among college grads (1.9%) is similar to pre-pandemic levels. A Federal Reserve study in May found that “borrowers have seen their financial positions improve during the pandemic,” owing in part to generous government transfer payments, including $3,600 child tax credits and $3,200 in stimulus checks. Delinquency rates on auto loans and credit cards are below pre-pandemic levels.
The two-and-a-half-year pause has saved the average borrower $400 a month, which many have saved, invested or used to pay off higher-yielding debt. Yet it has also cost taxpayers $155 billion to date since interest isn’t accruing on student debt that Uncle Sam is financing with debt that carries increasing interest rates. This latest extension would start in January, and if the litigation isn’t ended by June 30 payments would be delayed for another 60 days after that. This could cost another $40 billion.
None of this money has been appropriated by
Congress. The administration cites the same legal justification — the 2003 Heroes Act — for extending the payment moratorium as it has for canceling debt outright. It claims the law allows the education secretary to waive any regulatory or statutory provision related to the federal student aid program during a national emergency.
Missouri and other states that have challenged the administration’s writeoff are likely to prevail on the merits if the Supreme Court agrees they have legal standing. But the administration almost appears to be taunting the high court and reminding justices that it could extend the payment pause even if its write-off gets struck down.
That is all the more reason for the Supreme Court to take the case. The administration’s unilateral claim of a never-ending COVID national emergency to provide sweeping student loan relief deserves to get slapped down as the abuse of power it is.