Will your student loans be canceled? It is unlikely, according to the law.

Here’s what you need to know – and what it means for your student loans.

Student loans

The answer to the question of whether you will get your student loan canceled essentially depends on a single legal note. that the US Department of Education will deliver to President Joe Biden in the coming weeks. It may seem unfair to the millions of student loan borrowers who are struggling to repay their student loans, but now it is the reality. The latest battle over student loan cancellation between the Progressives and the President is no longer a matter of politics. It is now the law. This memo will include a legal analysis of the president’s power to unilaterally cancel student loans by executive order without further authorization from Congress. Under current law, this could be another setback for student loan cancellation. While Biden may accept or ignore the recommendations in this non-binding legal note, the legal analysis will likely determine whether you get a student loan cancellation.

From a legal point of view, the arguments in favor of canceling a student loan do not seem good for these 4 reasons:

1. The law does not say the president can unilaterally cancel $ 1 trillion in student loans

A proposal to write off up to $ 50,000 in student loan debt, for example, could cost up to $ 1 trillion. If Congress really wanted the president to have unilateral power to write off everyone’s student loan debt, Congress would have explicitly said so. In 1965, Congress might not have imagined that student loan debt would reach $ 1.7 trillion. At the same time, Congress is not traditionally in the business of handing over its power – especially something much like spending $ 1 trillion – to other branches of government. To demonstrate clear legal support for the cancellation of student loans, the Department of Education should show that Congress in 1965 intended to waive all responsibility for federal student loans and granted the Department of Education the unlimited power to cancel student loans at will.

According to supporters of student loan cancellation, the legal basis for large-scale student loan cancellation is Section 432A of the Higher Education Act 1965. According to this legislation, the Department of Education has the power to “modify, compromise, waive or release any right, title, claim, lien or demand in any form, including any capital or right of redemption. . The language is somewhat ambiguous. First, a plain text reading could support large-scale student loan forgiveness. The legislation, as proponents say, does not mention any explicit limitations. A second reading would conclude that while the Department of Education can cancel student loans, Congress has granted limited authorization based on fair considerations or other essential financial relief. It is unlikely that Congress simply granted unlimited authority to the executive branch to write off unlimited student loan debt. In practice, it is common knowledge that the education department can cancel student loans on a case-by-case basis. For example, Biden has canceled at least $ 2.3 billion in student loans since becoming president. (You can find out here if you are eligible for this student loan cancellation). The question will be whether this authority is limited or absolute. In other words, do Does the law allow the Department of Education to write off student debt?

2. Cancellation of student loan requires explicit authorization from Congress

Biden wants to cancel student loans in 3 ways. Having said that, he may not have the power to do so. That’s why, as a presidential candidate and as president, Biden called on Congress to pass student loan cancellation. Why? Under the ownership clause and the appropriation clause of the US Constitution, the executive branch cannot cancel debt that is owed to the federal government without a statutory grant from Congress. This means that Congress must grant specific authority to the executive branch before the president or the education department acts to mass cancel student loans. Only Congress has the power to dispose of federal property, unless Congress explicitly gives that authority to an administrative agency. Supporters of student loan cancellation should argue that while the executive branch does not have the power to enact student loan cancellation, the Higher Education Act of 1965 grants an exception because Congress granted a such right through legislation almost 60 years ago. Or, they could pass legislation that grants such unilateral authority to the president.

3. Canceling a student loan may require new credit

In addition to the authorization to cancel student loans, Congress may need to explicit appropriation for the cancellation of a student loan. Congress allocated money for federal student loans, but did not create new credit for the cancellation of those same student loans. If the Department of Education now deems it has the power to cancel student loans, a court could require the Department of Education to prove that Congress has provided for all student loans to be eligible for the full cancellation of student loans. More importantly, a court could refuse the cancellation of a student loan if the court finds that the Ministry of Education has sought to “deduct credits from an ambiguous statutory text”. (The ambiguous text would be the Higher Education Act of 1965).

4. The Department of Education has rules that limit the cancellation of large-scale student loans

In 1966, a year after the Higher Education Act, Congress created the Federal Claims Collection Act (FCCA), which governs the federal government’s debt collection practices, including for financially troubled borrowers. The FCCA allows “compromise” authorization under certain circumstances, but does not grant unlimited authority to the education department, for example, to simply cancel large-scale student loans. In 2016, under the Obama administration, the Department of Education changed and incorporated FCCA standards into its student loan programs. Given this precedent, it may be difficult for the Department of Education now to ignore its internal rules that govern student loan programs. However, the Department of Education could change its rules or define the scope of these limitations.

Student loan forgiveness: next steps

There are two main avenues for canceling student loans. For the executive branch, canceling student loans is no longer a matter of policy; this is the law. If Biden unilaterally cancels student loans, you can expect large-scale student loan forgiveness to be stuck in court for months, if not years. If a legal challenge does reach the U.S. Supreme Court, the court, in its current composition, is unlikely to support large-scale student loan cancellation. In Congress, student loan cancellation is a Politics publish. Despite their differences, however, the top three in this debate – Biden, Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) – agree that there should be at least one large-scale student loan cancellation. . The main differences are the amount of student loan cancellation and who has the authority to cancel student loans. If Biden isn’t canceling student loans, it’s critical to understand this: For student loan cancellation to happen, Congress will need to pass legislation that more members of Congress can support.

Make sure you know the next steps for paying off a student loan. Consider these potential options, all of which are free:

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