President Joe Biden speaks about student loan debt forgiveness in the Roosevelt Room of the White House, Aug. 24, 2022, in Washington. (AP Photo/Evan Vucci, File)

On Tuesday, the libertarian Pacific Legal Foundation filed a lawsuit challenging the Biden administration’s plan to forgive student debt, calling the initiative “flagrantly illegal.” And a host of other conservative actors, ranging from Senator Ted Cruz to state attorneys general to the Heritage Foundation, are strategizing how to do the same. “I think there’s a lot of people celebrating prematurely,” said Arizona Attorney General Mark Brnovich, one of the would-be challengers. However, the debt plan is on a much sounder legal footing than its critics suggest.

Under the program, an individual who earned less than $125,000 in 2020 or 2021 will be eligible for up to $10,000 in federal debt forgiveness, and certain Pell Grant recipients could qualify for a further $10,000 cancellation. (One of this article’s authors falls into the former category.)

A legal memo issued by the Department of Justice asserts that the Education Department’s ability to waive student debt stems from the Higher Education Relief Opportunities for Students (HEROES) Act of 2003. That act authorizes the secretary to “waive or modify any statutory or regulatory provision” within the department’s financial aid programs “as the Secretary deems necessary in connection with a … national emergency.” The statute provides this authority for the purpose of ensuring that “recipients of student financial assistance … are not placed in a worse position financially” on account of a national crisis. The White House has explained that the national emergency it believes justifies the forgiveness policy is the coronavirus pandemic.

Yet some commentators, including the progressive law professor Jed Shugerman, predict that the administration will struggle to offer a good-faith legal argument connecting the student debt plan to the COVID-19 national emergency, as the law requires. We disagree.

The onset of the pandemic left Americans in deep financial insecurity. As a result, Congress authorized three rounds of stimulus checks—two during the Trump administration—which phased out for individuals at $99,000, $87,000, and $80,000. Given that these thresholds echo the debt plan’s $125,000 eligibility cap, President Joe Biden’s program targets the same groups of people Congress believed were most impacted by the pandemic.

The loan forgiveness plan is predicated on the period of financial distress that overlaps with the worst of the pandemic. Individuals can qualify for forgiveness based on their 2020 or 2021 incomes, when the pandemic’s employment distortions peaked. Indeed, COVID disruptions continue to bedevil Americans’ finances, and in 2022, inflation has eroded purchasing power further. Debt relief, which Goldman Sachs predicts will have a marginal inflationary effect, is a logical and legally consistent means of relieving the borrowers’ budgets as they cope with the pandemic’s ongoing economic repercussions.

That the plan furthers the Biden administration’s larger policy ambitions doesn’t render the program’s purpose spurious, as Shugerman suggests. So long as the Department of Education offers a well-reasoned justification for its policy on pandemic grounds, the administration is free to tout the initiative as part of its larger goals.

Other features of the HEROES Act weigh in favor of the administration too. The statute states that the education secretary “is not required” to exercise waiver authority “on a case-by-case basis.” Ensuring that borrowers “are not placed in a worse position financially” on account of a national emergency should require erring on the side of generosity. And the law’s text, which instructs the secretary to act as he “deems necessary,” should win deference from the courts.

A few years ago, these arguments would have easily carried the day. However, under the Supreme Court’s emergent “major questions doctrine,” adopted last June in an environmental case, West Virginia v. EPA, the judiciary no longer readily defers to the government’s more ambitious regulatory actions. Unless the Court is as cynical as its harshest critics fear, however, the Biden debt plan should survive a challenge even under the new doctrine.

In West Virginia, Chief Justice John Roberts outlined a two-part test for determining whether an ambitious regulatory policy is lawful. First, a court determines if the administrative action qualifies for extra scrutiny as a “major question.” Judges make this assessment based on the action’s novelty (or lack thereof) and political and economic significance. If an executive branch policy raises a “major question,” then the second step of the test shifts the burden of persuasion to the agency, which must point to “clear congressional authorization” for its action.

At both stages of this inquiry, the Biden debt plan looks to be on solid legal ground. As recounted in the DOJ memo, since the HEROES Act’s passage, both Trump and Biden administrations have used the statute’s debt relief authority to benefit student borrowers. At the pandemic’s start, Donald Trump’s Department of Education used HEROES Act authority to pause federal loan payments and suspend interest accrual. Congress affirmed that policy decision in the 2020 CARES Act, directing the department to continue its pause and suspension through September 2020. After that deadline, the Trump administration extended the policy, which the Biden administration has continued.

As deficit hawks have been quick to point out, one can characterize the suspension of interest accrual as debt cancellation. The only difference between the past and current department policies is the object of cancellation—interest versus principal—a distinction with no legal relevance in the statute. If the interest pause was lawful, as two ideologically divergent administrations have concluded, so is Biden’s forgiveness policy.

Nor is it likely that the loan forgiveness program is “economically and politically significant,” as defined by the West Virginia majority. Although the debt relief plan is financially significant for borrowers, its cost—between $25 billion and $50 billion annually for the next decade—represents a fraction of the annual federal budget, which exceeds $4 trillion, and an even smaller fraction of GDP.

Further, acknowledging the secretary’s debt relief authority poses no “slippery slope” problem. Administering federal loan programs is within the department’s expertise. Debt relief triggered by a global pandemic that both Trump and Biden have deemed a national emergency does not put the Education Department on a path toward extending its authority over vast swaths of the economy. And rather than imposing billions of dollars in costs on private parties—a characteristic that Justice Neil Gorsuch cited as an indication that a policy might flunk the major questions test—debt relief expenditure comes primarily from public funds.

Even if courts find that the debt relief constitutes a “major question,” the plan should survive. At that stage of the inquiry, the burden shifts to the government to demonstrate “clear congressional authorization” for the program beyond “a merely plausible textual basis.” Here, we have that. That the secretary’s HEROES Act authority encompasses mass debt cancellation is not “merely plausible”; it is, arguably, the only plausible reading of the term waive.

Justice Elena Kagan’s dissent in West Virginia offered a powerful critique of the major questions doctrine, implying that it had been devised to allow conservative judges to strike down government policies they dislike. Should the high court invalidate the debt plan when it so squarely fits its statutory authority, that cynicism would prove well deserved.

Peter M. Shane

Peter M. Shane is the Jacob E. Davis and Jacob E. Davis II Chair in Law Emeritus at Ohio State University and a Distinguished Scholar in Residence at the New York University School of Law. His forthcoming book is Democracy’s Chief Executive: Interpreting the Constitution and Defining the Future of the Presidency.

Will Dobbs-Allsopp

Will Dobbs-Allsopp is a lawyer and the director of strategic initiatives at Governing for Impact. Prior to his legal career, he covered Congress for Morning Consult.