Student Loan Debt Relief is a Big Deal – for Congress
Matt Glassman | September 7, 2022
On August 24th, President Biden announced a plan to provide student loan debt relief. The policy will include debt cancellation of up to $20,000 for Pell Grant recipients and up to $10,000 for non- Pell Grant debt, for anyone with an income less than $125,000 ($250,000 for married couples). In addition, future monthly payments will be capped at 5% of discretionary income, and the pause on student loan repayment will be extended through December 2022. The student loan debt crisis has been built over decades—many factors contribute to it and many effects stem from it. This policy response, too, can be seen through many angles. Here, the core policy details are discussed, as well as the legal basis for such administrative action, and finally, what this means for Congress. We should all be concerned when Congress is written out of the legislative process.
A Few Policy Details:
An official budget score from the Department of Education and the Office of Management and Budget is not expected for several weeks. The White House has estimated that the policy will cost roughly $240 billion over the next decade, but the nonpartisan Committee for a Responsible Federal Budget has estimated that the total cost may be more than double that amount. In either case, this is a major policy change with a large fiscal impact.
As with most policies of this magnitude, there has been considerable public debate. Opinion polls show majorities favoring the president’s plan, but with large divisions by age. Republican leaders have strongly criticized the plan, many expressing concerns about the impact on inflation and the unfairness of debt forgiveness to borrowers who paid their debts back. Democrats have largely applauded the president’s plan, defending it as sensible and targeted relief for tens of millions of Americans.
How is Biden Doing This?
While the substantive debate over student loan debt relief feels similar to most partisan fights over targeted government benefits with large price tags, the policy process is striking in at least one way: Congress has not been involved. President Biden’s plan is wholly based on using executive authority to alter the terms of student loan repayment under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003.
The HEROES Act was passed by Congress in order to allow the Secretary of Education to grant waivers or relief to student aid recipients who faced hardships in connection with military service, living in disaster areas, or economic hardships resulting from war, natural disasters, or national emergencies. Originally intended to help military service members in the post 9/11 era, it was used by the Trump administration during COVID to extend the student loan repayment pause. The Biden administration is now citing it as the basis for categorical debt cancellation.
A memo released by the General Counsel of the Department of Education lays out the legal case for such use, specifically rescinding a January 2021 memo from the Trump administration that argued such authority was not available under the HEROES Act. We will also get more detailed legal reasoning from the administration once the final regulations for the program are released over the coming months. There will certainly be legal challenges to the policy; it is unclear right now whether the policy will survive those challenges.
What Does This Mean For Congress?
Regardless of its ultimate legality, the administration’s plan should be cause for concern in Congress. It continues a general trend of creative executive branch policymaking using statutory authority Congress provided but did not intend. And that much is clear: while Congress certainly purposefully gave the executive the power to adjust student loan repayments, few if any who voted for the legislation intended it to be used to cancel debt for tens of millions of Americans at the cost of what might be half a trillion dollars.
Part of a Larger Pattern of Executive Action:
President Biden’s actions bring to mind similar creative uses of executive statutory discretion by his predecessors. President Trump transferred funds appropriated by Congress for military construction to his controversial border wall project by declaring a national emergency under the National Emergencies Act. Similarly, President Obama used authority under the Immigration and Nationality Act to create the Deferred Action for Childhood Arrivals (DACA) and Deferred Action for Parents of Americans (DAPA) immigration programs.
What all these programs have in common is that none of them had the support in Congress to be passed as legislation. Prior to the creation of DACA and DAPA, immigration reform failed in Congress during both the Bush and Obama administrations. Trump’s border wall was repeatedly denied funding by the Republican-controlled 115th Congress. And student loan forgiveness has made no legislative headway in the Democratically-controlled 117th Congress.
None of this was invented by Presidents Obama, Trump, or Biden. Most presidents seek to stretch their statutory discretion to achieve policy goals. And the executive branch needs flexibility to make good policy; Congress can set broad outlines of policy in legislation, but it cannot fill in all of the details. It is fundamentally sound governance for Congress to provide broad statutory authority to executive branch leaders.
But it also demands that Congress have both the will and capacity to challenge the executive branch when proper statutory discretion begins to resemble executive-branch legislating. Right now, Congress has neither. It’s also notable that these executive actions are trending not just into traditional lawmaking powers but into progressively eroding the congressional power of the purse. From transferring funds to spending funds outright, this is a concerning precedent.
Why are Congress’ Hands Tied?
Some of this is a symptom of rising partisan polarization. Presidents can now depend on congressional co-partisans usually being aligned with them substantively on policy and largely unwilling to criticize them in ways that weaken the party politically. Increasing frustration over Senate partisan gridlock has encouraged executive branch fixes to major policy problems, and muted institutional defenses of Congress by members of the president’s party.
The resulting dynamic has politically empowered the president. Opposition party members in Congress complain bitterly about executive aggrandizement. But upon winning the presidency, many partisans see no sense in trying to rein in executive behavior; indeed, many explicitly see aggressive executive action as a primary source of policymaking. For all the complaints about the Bush, Obama, and Trump administrations, neither Democrats nor Republicans have shown much collective interest in reining in the creative policymaking of their own presidents. By taking this action during the period of united government before the midterms, Biden has also accelerated the trend of his predecessors, who engaged in such actions after midterms that lost their congressional majorities.
The problem is also institutional. Congressional capacity continues to be underfunded, and this directly translates into an inability to compete politically with the president. Despite some changes for the better—more funding for congressional staff, minimum and maximum staff salary increases—the legislative branch has still never expanded to meet the growth in the size and authority of the executive branch post- 9/11. Oversight capacity continues to lag far behind what is necessary.
Congress has also lost one of its key tools that formerly prevented runaway executive policymaking: the legislative veto. Prior to being ruled unconstitutional in INS v. Chadha (1983), Congress would routinely provide statutory discretion to the executive branch, but retain the right to nullify any individual use of that discretion with a majority vote in one or both chambers of Congress.
After the Chadha decision, Congress was left with the much weaker tool of the disapproval resolution, which requires submission to the president, who predictably vetoes attempts to rein in his own actions. The 116th Congress voted to end the Trump national emergency related to the border wall. Prior to Chadha, that would have been the end of it. In 2019, Trump simply vetoed the disapproval resolution.
What Could be Done to Empower Congress?
Congress can make institutional changes to fix this. One solution would be to convert all disapproval resolutions to approval resolutions, sunsetting presidential uses of statutory powers unless Congress affirmatively agrees with them. More broadly, Congress could sunset entire statutory grants of power to the president (such as war authorizations), such that inaction by Congress would extinguish the power, rather than the supermajorities currently needed to repeal them over vetoes.
Structural changes, however, can only go so far. If partisan members of Congress continue to prioritize substantive policy over institutional power, the trend to ever-greater executive branch policymaking will continue. Student loan forgiveness may be smart and sound policy. Creating it via executive branch discretion in ways Congress did not intend is, at best, a bad precedent.
The value of a republic lies in part on the strengths of legislative government—a diverse membership, local representation, and public deliberation over policy. Executive branch policymaking provides none of those benefits. When large, expensive policies are wholly crafted in this manner, it’s bad for Congress. But it’s also bad for American democracy.