Amicus Curiae Brief — Joseph R. Biden, President of the United States, et al., Petitioners v. Nebraska, et al.

Nos. 22-506 & 22-535

In the Supreme Court of the United States

__________

JOSEPH R. BIDEN, PRESIDENT OF THE UNITED STATES,

ET AL.,

Petitioners,

v.

STATE OF NEBRASKA, ET AL.,

Respondents.

__________

DEPARTMENT OF EDUCATION, ET AL,

Petitioners,

v.

MYRA BROWN, ET AL.,

Respondents.

__________

On Writs of Certiorari Before Judgment to the

United States Courts of Appeals for the Eighth and

Fifth Circuits

__________

BRIEF OF THE CATO INSTITUTE AND MANHATTAN INSTITUTE AS AMICI CURIAE IN

SUPPORT OF RESPONDENTS

__________

Ilya Shapiro

MANHATTAN INSTITUTE

52 Vanderbilt Ave.

New York, NY 10017

(212) 599-7000

ishapiro@

manhattan-institute.org

Anastasia P. Boden

Counsel of Record

Thomas A. Berry

Isaiah McKinney

CATO INSTITUTE

1000 Mass. Ave., N.W.

Washington, DC 20001

(202) 216-1414

aboden@cato.org

i

QUESTION PRESENTED

Whether the Department of Education’s loan-cancellation program exceeds the Secretary’s statutory

authority.

ii

TABLE OF CONTENTS

QUESTION PRESENTED ........................................... i

TABLE OF AUTHORITIES ....................................... iii

INTEREST OF AMICI CURIAE ................................. 1

SUMMARY OF ARGUMENT ..................................... 2

ARGUMENT ................................................................ 6

I. A NATIONWIDE DEBT-FORGIVENESS

PLAN IS NOT “NECESSARY” TO

ACHIEVE THE GOVERNMENT’S

PURPORTED GOAL ........................................ 6

II. THE MAJOR QUESTIONS DOCTRINE

MAKES THIS AN EASY CASE ..................... 12

III.THE DEBT-FORGIVENESS PLAN IS

BAD POLICY THAT WILL HAVE BAD

CONSEQUENCES.......................................... 18

A. Student Debt Forgiveness Would Likely

Lead to Price Inflation ............................... 19

B. Student Debt Forgiveness Does Not

Target Those Most in Need of Aid ............ 20

C. Student Debt Forgiveness Comes at an

Enormous Cost to Taxpayers .................... 21

CONCLUSION .......................................................... 22

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Alabama Ass’n of Realtors (AAR) v. HHS, 141

S. Ct. 2485 (2021) ............................................. 13, 14

FTC v. Bunte Brothers, Inc., 312 U.S. 349

(1941) ...................................................................... 12

Gonzales v. Oregon, 546 U.S. 243 (2006) .................. 16

NFIB v. DOL, OSHA, 142 S. Ct. 661 (2022) ....... 12, 13

Util. Air Regul. Grp. v. EPA, 573 U.S. 302

(2014) ...................................................................... 17

West Virginia v. EPA, 142 S. Ct. 2587 (2022)

.................................................... 3, 12, 14, 15, 16, 17

Statutes

20 U.S.C. § 1098bb ............................................... 4, 5, 8

20 U.S.C. § 1098ee ....................................................... 7

Higher Education Relief Opportunities for

Students (HEROES) Act, Pub. L. No. 10876, § 2, 117 Stat. 904-905 (20 U.S.C.

§ 1098bb et seq.)........................................................ 6

iv

Other Authorities

149 Cong. Rec. 7922 (Apr. 1, 2003) ............................. 6

Bryan Hood, The World’s Most Expensive

Burger Has Wagyu Beef, Beluga Caviar—

and Costs $6,000, Robb Report (July 5,

2021) ......................................................................... 3

David O. Lucca et al., Credit Supply and the

Rise in College Tuition: Evidence from the

Expansion in Federal Student Aid

Programs, 32 Rev. of Fin. Stud. 423 (2018) .......... 20

Editorial, Biden’s student loan announcement

is a regressive, expensive mistake, Wash.

Post (Aug. 24, 2022) ............................................... 21

Elizabeth Goitein, Biden Used ‘Emergency

Powers’ to Forgive Student Debt? That’s A

Slippery Slope, Wash. Post (Sept. 1, 2022)

.................................................................... 15, 16, 18

FACT SHEET: President Biden Announces

Student Loan Relief for Borrowers Who

Need It Most, White House (Aug. 24, 2022) ............ 8

Ilya Somin, Biden’s Student Loan Debt

Cancellation is a Trumpian Abuse of

Emergency Powers, Volokh Conspiracy

(Sept. 2, 2022)................................................... 11, 16

v

Jed Shugerman, Biden’s Student-Debt Rescue

Plan Is a Legal Mess, The Atlantic (Sept. 4,

2022) ..................................................... 10, 11, 16, 18

Jenna A. Robinson, The Bennett Hypothesis

Turns 30, James G. Martin Ctr. for Acad.

Renewal (2017) ....................................................... 20

Jennifer Mascott, Early Customs Laws and

Delegation, 87 Geo. Wash. L. Rev. 1388

(2019) ........................................................................ 4

Neal McCluskey, Biden Student Debt

Cancellation Proposal: Even Worse than

Expected, Cato at Liberty (Aug. 24, 2022)....... 18, 22

Neal McCluskey, Biden’s Student‐Debt

Cancellation Refutes Itself, National Review

(Online) (Oct. 19, 2022) .......................................... 22

Neal McCluskey, Top Five Reasons Federal

Student Debt Cancellation Is a Bad Idea,

Cato at Liberty (Aug. 23, 2022) ....................... 19, 20

Phillip L. Swagel, Costs of Suspending

Student Loan Payments and Canceling

Debt, Cong. Budget Off. (Sept. 26, 2022)................. 8

The Federalist (Madison) ............................................ 4

vi

U.S. Bureau of Labor Statistics,

Unemployment rates for persons 25 years

and older by educational attainment (last

visited Feb. 2, 2023) ............................................... 21

1

INTEREST OF AMICI CURIAE1

The Cato Institute is a nonpartisan public policy

research foundation founded in 1977 and dedicated to

advancing the principles of individual liberty, free

markets, and limited government. Cato’s Robert A.

Levy Center for Constitutional Studies helps restore

the principles of constitutional government that are

the foundation of liberty. Toward those ends, Cato

publishes books and studies, conducts conferences,

and produces the annual Cato Supreme Court Review.

The Manhattan Institute (MI) is a nonprofit public

policy research foundation whose mission is to develop

and disseminate new ideas that foster economic choice

and individual responsibility. To that end, it has historically sponsored scholarship supporting the rule of

law and opposing government overreach. MI’s constitutional studies program aims to restore constitutional

protections for individual liberty, maintaining federalism and the separation of powers.

This case interests amici because the executive

branch threatens individual liberty when it unilaterally enacts major policies of nationwide significance

without a clear authorization from Congress.

1 Rule 37 statement: No part of this brief was authored by any

party’s counsel, and no person or entity other than amici funded

its preparation or submission.

2

SUMMARY OF ARGUMENT

Suppose that a teenager’s parents left town for

the weekend, giving their teenager permission to use

the family car for home improvement projects while

they were gone. Could the teenager use the car to drive

to Home Depot and bring home sealant for the front

porch? Certainly. Could the teenager sell the car to pay

for a new wing of the house? It’s unlikely the parents

would consider this a faithful exercise of their permission. And if the teenager protests that selling the car

could technically be interpreted as falling within the

letter of their instructions, that would not improve the

parents’ mood.

Like the teenager using the borrowed car, the executive branch exercises authority only upon the permission and instruction of the legislature, the branch

charged with making the law and deciding fundamental policy questions. And like the teenager, the executive branch has a duty to follow those instructions

faithfully, not self-servingly. Statutes are directives

made by elected representatives on behalf of the people, not word puzzles for the executive branch to play

with and twist into what it wants.

When we interpret instructions in everyday life,

we naturally understand that permission to take drastic action is given more explicitly than permission to

take less consequential actions. When someone lends

her credit card to a colleague and casually asks him to

pick her up something for lunch, she doesn’t expect

3

him to spend her money on a $6,000 burger.2 When we

let a friend stay in a guest bedroom for the night and

say “make yourself comfortable,” we don’t expect the

friend to repaint the walls to match his childhood

home. And when a boss tells an employee to do what’s

necessary to ensure a staff meeting is well-attended, a

reasonable employee won’t take that as a license to extort or kidnap his coworkers.

Instructions and permissions have reasonable

limits that we all understand based on context. The

same holds true for interpreting statutes. That is the

common-sense observation behind the Major Questions Doctrine and its clear-statement rule. “Agencies

have only those powers given to them by Congress.”

West Virginia v. EPA, 142 S. Ct. 2587, 2609 (2022).

When members of Congress consider whether to vote

for statutory text and grant new authority to the executive branch, they should be able to do so under the

assurance that the spirit of the statute’s instructions

will not be ignored as in the examples above.

Courts must enforce the reasonable limitations

found in both a statute’s text and in its context. Doing

so preserves liberty by ensuring that new powers are

granted to the federal government only by the consent

of the governed, acting through their elected representatives in Congress. When the executive branch exploits a statute to claim a sweeping new power that

2 Bryan Hood, The World’s Most Expensive Burger Has Wagyu

Beef, Beluga Caviar—and Costs $6,000, Robb Report (July 5,

2021), https://bit.ly/3WzKzia.

4

Congress never granted, liberty and democracy suffer.

The president “cannot of himself make a law.” The

Federalist No. 47, at 303 (James Madison) (Clinton

Rossiter ed., 1961). The Framers intentionally designed the lawmaking process to be difficult, and this

process ensures that major new government powers

are only granted after deliberation and consensus. See

The Federalist No. 51 (James Madison); see also Jennifer Mascott, Early Customs Laws and Delegation, 87

Geo. Wash. L. Rev. 1388, 1449–50 (2019) (“[M]embers

of [the First] Congress viewed themselves as the actors

responsible for reaching finely grained policy determinations that would impact and bind the public. . . . The

key role of legislative agreement reached through compromises . . . was essential to the federal separation of

powers[.]”).

These principles require invalidating the debt forgiveness at issue here, because Congress never

granted the executive branch the authority to take

such a sweeping action. In 2003, Congress gave the

Secretary of Education a limited grant of authority to

waive or modify provisions of federal law related to

student loans. But the Secretary may only waive or

modify such provisions “as may be necessary to ensure” that certain defined goals are achieved. 20

U.S.C. § 1098bb(a)(2). One of those defined goals is

that “recipients of [federal] student financial assistance” who are affected by a military operation or national emergency “are not placed in a worse position

financially in relation to that financial assistance

5

because of their status as affected individuals.” Id.

§ 1098bb(a)(2)(A).

The government now argues that under this law,

it has the authority to forgive billions of dollars in student loans across millions of borrowers. Specifically, it

argues that: 1. The COVID-19 pandemic is a national

emergency; 2. Every federal student loan borrower either lives in a COVID disaster area or has otherwise

been financially affected by that emergency; 3. As a result of that emergency, some borrowers will default on

their student loans once payments finally resume after

a multi-year pause; and 4. Forgiving some (or all) of

millions of borrowers’ principal balances will ensure

their overall risk of default is no worse than it was before the pandemic. Pet. Br. 34–36.

This argument runs headlong into a key limiting

word in the statutory text: “necessary.” Most of the

steps in a Rube Goldberg machine are far from “necessary” to achieve their final aim, because a simpler and

more direct method is available. The same is true here.

If the government’s purpose were truly to reduce the

harm of more frequent defaults, there are far more direct means available to that end. These include more

aggressive measures to put borrowers on incomebased repayment plans and, perhaps even more

straightforward, waiving some of the legal consequences of missed payments. Forgiving $400 billion of

debt so that fewer people will suffer penalties for

missed payments is like cutting $400 billion in income

taxes so that fewer people will suffer IRS underpayment penalties.

6

Finally, the Major Questions Doctrine’s clearstatement rule makes this an easy case. Since the action at issue here was not “necessary” to achieve the

government’s purported aim, the statutory text certainly does not contain a clear statement granting the

Secretary such power. Whether to grant nationwide

debt forgiveness is undoubtedly a major policy question, one that has been debated in Congress as it considered bills that would explicitly make that policy

choice. A $400 billion debt-forgiveness plan is a major

policy decision that must be made by Congress, and

Congress has declined to enact that policy. The administration’s debt-forgiveness action should be vacated.

ARGUMENT

I.

A NATIONWIDE DEBT-FORGIVENESS

PLAN

IS

NOT

“NECESSARY”

TO

ACHIEVE THE GOVERNMENT’S PURPORTED GOAL

In 2003, Congress enacted the Higher Education

Relief Opportunities for Students (HEROES) Act, Pub.

L. No. 108-76, § 2, 117 Stat. 904-905 (20 U.S.C.

§ 1098bb et seq.). As implied by its name and timing,

the law was enacted as a reaction to the Iraq War. Several of the floor statements from members of Congress

reveal that a primary motivation for the Act was to ensure that military members could have their student

loan payments deferred while serving their country.3

3 See, e.g., 149 Cong. Rec. 7922 (Apr. 1, 2003) (“[T]he HEROES

Act of 2003 . . . gives the Secretary the authority . . . to ensure

7

But the HEROES Act extends eligibility for its

benefits to more than just members of the military.

The law refers more broadly to “affected individuals,”

and that term is defined to encompass several categories of people beyond just service members, including

anyone who “resides . . . in an area that is declared a

disaster area . . . in connection with a national emergency.” 20 U.S.C. § 1098ee(2)(C). The federal government has declared the COVID-19 pandemic a national

emergency and has also declared the entire United

States a disaster area in connection with that emergency, which means, according to the government,

that every resident of the United States is currently an

“affected individual” as defined by the act. Pet. Br. 35.4

The HEROES Act allows for several potential

benefits for “affected individuals.” Relevant here, the

Secretary of Education may “waive or modify any provision” of law applicable to federal student loans “as

may be necessary to ensure that . . . recipients of student financial assistance . . . who are affected individuals are not placed in a worse position financially in

relation to that financial assistance because of their

that our troops whose lives have been disrupted suddenly, and

now serve us in the Middle East and in Iraq, to make sure that .

. . their loan payments are deferred until they return.”) (statement of Rep. Isakson).

4 For those student loan borrowers who reside outside the United

States, the government argues that another definition of “affected

individual” applies, because those borrowers “have suffered ‘direct economic hardship’ due to the pandemic.” Pet. Br. 35 (quoting

20 U.S.C. § 1098ee(2)(D)).

8

status as affected

§ 1098bb(a)(2)(A).

individuals.”

20

U.S.C.

In August of 2022, the administration announced

that after a nearly three-year pause on federal student

loan payments, certain borrowers meeting an income

cutoff would receive $10,000 to $20,000 in debt forgiveness on their principal student loan balance.

FACT SHEET: President Biden Announces Student

Loan Relief for Borrowers Who Need It Most, White

House (Aug. 24, 2022).5 While the total cost to taxpayers from this program is uncertain, the Congressional

Budget Office has estimated it to be around $400 billion. Phillip L. Swagel, Costs of Suspending Student

Loan Payments and Canceling Debt, Cong. Budget Off.

(Sept. 26, 2022).6

To justify the legality of this action, the government argues that the requirement to pay back the

principal balance of a federal student loan is a “provision” of federal law that the Secretary of Education

may “waive or modify” for affected individuals. Pet. Br.

36; but see Nebraska Resp. Br. 44–47 (explaining why

the government’s action cannot plausibly be described

as a waiver or modification of the provisions at issue).

Thus, the argument goes, the Secretary may forgive

any amount of federal student debt for any residents

of a disaster area, so long as that forgiveness is “necessary to ensure that” the individuals “are not placed

in a worse position financially in relation to that

5 Available at https://bit.ly/3Ja1Onw.

6 Available at https://bit.ly/3Wz3EBl.

9

financial assistance because of their status” as residents of a disaster area.

That leaves the question whether loan forgiveness for some or all U.S. residents would in fact

ensure that this goal is achieved. The government argues that it would, on the theory that loan forgiveness

will lower overall default rates to where they would

have been but for the pandemic. The government argues that “historical data about borrowers who transitioned back to repayment after periods of forbearance,

including after other emergencies,” showed that such

borrowers are typically at “elevated risk of delinquency and default.” Pet. Br. 9. Under the government’s reasoning, reducing the total principal balance

for certain borrowers would have the effect, among

other things, of lowering their monthly payments and

reducing their likelihood of default. J.A. 240–41.

The flaw in this reasoning, however, is that the

government has failed to plausibly explain how debt

forgiveness could be “necessary” to the Department’s

goal. Even presuming, for the sake of argument, that

reducing the likelihood of defaults is a legitimate statutory goal and that some increase in defaults would be

caused by the pandemic itself (as opposed to the Department’s own payment pause), the government still

would have several less drastic and more targeted

means at its disposal.

First, as the government itself acknowledges,

“borrowers have other options to reduce monthly payments, like income-driven repayment (IDR) plans.”

10

J.A. 241. “Borrowers using income-driven repayment

plans have significantly lower rates of default and delinquency than borrowers who do not use those plans.”

J.A. 242. And “[m]any borrowers who are eligible for

IDR plans are not yet enrolled.” J.A. 241. Initiatives to

increase enrollment in IDR plans would thus make

progress toward the same ends (reducing defaults) using far less economically consequential means.

Remarkably, the government’s only response is

that spending $400 billion or more on debt forgiveness

could have the collateral benefit of providing “visibility” that “will likely attract these borrowers to apply

in numbers that [the Department’s] efforts to increase

enrollment in IDR have not.” J.A. 241. But the Department provides no explanation why additional outreach

or advertising could not achieve the same increase in

visibility at a small fraction of the cost.7 Nor is there

any explanation why targeted suggestions or even automatic enrollment in IDR plans could not be employed for borrowers who have missed payments and

are at risk of default.

Additionally, the government ignores an even

more direct solution for ameliorating any harms from

increased defaults. It notes that borrowers who “go delinquent or default on their student loans suffer substantial negative penalties.” J.A. 229. But most

7 See Jed Shugerman, Biden’s Student-Debt Rescue Plan Is a Le-

gal Mess, The Atlantic (Sept. 4, 2022), https://bit.ly/3J53FK9

(“Some nonpartisan groups estimate a cost of $500 billion over a

decade. This size is inconsistent with a COVID-tailored relief program.”).

11

(perhaps all) of these negative penalties are legal ones

that are themselves presumably waivable under the

same provision of the HEROES Act that the government relies on to enact debt forgiveness. The government’s premise is that the missed payments are harmful because of their consequences, such as “los[ing] access to affordable repayment options and flexibilities”

and having “balances become due immediately.” J.A.

239. But if that is so, then the administration could

reduce the harm of missed payments by temporarily

waiving those consequences. Showing grace to those

particular borrowers who will in fact miss payments is

a far more straightforward solution than preemptively

spending $400 billion to lower those payments for millions more borrowers than will need the help.8

For these reasons, even if every other (dubious)

step in the administration’s argument were sound, the

government has failed to offer a plausible explanation

why a sweeping nationwide debt relief program is

“necessary” to achieve the aim of reducing the negative

consequences of missed payments and increased defaults. The text of the HEROES Act passed by

8 See Ilya Somin, Biden’s Student Loan Debt Cancellation is a

Trumpian Abuse of Emergency Powers, Volokh Conspiracy (Sept.

2, 2022), https://bit.ly/3iUXLRh. (“For the overwhelming majority

[of borrowers], there is simply no proof that Covid is preventing

them from paying back their loans or even making it significantly

harder to do so.”); see also Shugerman, supra (“[I]t is far from obvious that we are still in a national emergency in August 2022,

and it is even further from obvious that everyone making less

than $125,000 is still in a ‘worse position’ specifically because of

COVID.”).

12

Congress does not grant authority for the administration’s debt-forgiveness plan.

II.

THE MAJOR QUESTIONS DOCTRINE

MAKES THIS AN EASY CASE

This Court has recently stayed or invalidated

three executive actions that were based on novel and

expansive readings of longstanding laws: OSHA’s

“vaccine or test” mandate, the CDC’s eviction moratorium, and the EPA’s greenhouse-gas-emission restrictions. One common theme of these decisions is

particularly relevant here: the Court’s justified skepticism of an agency suddenly discovering novel and

sweeping powers that it had never claimed before.

“[T]he want of assertion of power by those who presumably would be alert to exercise it” is “significant in

determining whether such power was actually conferred.” West Virginia, 142 S. Ct. at 2610 (quoting FTC

v. Bunte Brothers, Inc., 312 U.S. 349, 352 (1941)). Because the Department of Education has made just

such an implausible discovery of a consequential new

power here, this is a Major Questions case.

The breadth and novelty of the claimed power

was at the heart of this Court’s analysis when it stayed

the nationwide “vaccine or test” mandate imposed by

the Occupational Safety and Health Administration.

NFIB v. DOL, OSHA, 142 S. Ct. 661 (2022). As the

Court explained, the statute at issue consistently addressed only workplace hazards; it did not “address[]

public health more generally, which falls outside of

OSHA’s sphere of expertise.” Id. at 665. Noting that a

13

vaccine mandate is unlike the regulations OSHA typically imposes, the Court held that such a mandate “is

simply not ‘part of what the agency was built for.’” Id.

Supporting this view of OSHA’s powers was the fact

that OSHA had “never before adopted a broad public

health regulation of this kind.” Id. at 666.

The Biden administration argued that COVID‐19

was, literally speaking, a hazard in the workplace

(among many other places), but the Court rejected this

argument: “Permitting OSHA to regulate the hazards

of daily life—simply because most Americans have

jobs and face those same risks while on the clock—

would significantly expand OSHA’s regulatory authority without clear congressional authorization.” Id. at

665. In the same way, allowing the Department of Education to take the extraordinary step of cancelling billions of dollars in debt whenever a national emergency

might put some Americans at greater risk of student

loan default would significantly expand that agency’s

previously understood authority.

The Court expressed a similar skepticism of unprecedented claims of agency power when it stayed the

nationwide eviction moratorium imposed by the Centers for Disease Control. Ala. Ass’n of Realtors (AAR)

v. HHS, 141 S. Ct. 2485 (2021) (per curiam). That moratorium relied on a statutory authorization to impose

regulations preventing the interstate spread of disease. As the Court noted, the CDC had “imposed a nationwide moratorium on evictions in reliance on a decades‐old statute that authorizes it to implement

measures like fumigation and pest extermination.” Id.

14

at 2486. Again emphasizing the uniqueness of the action, the Court recounted that the law at issue had

“rarely been invoked—and never before to justify an

eviction moratorium.” Id. at 2487.

This Court also stressed the tenuousness of the

connection between housing regulations and the

agency’s focus (public health), describing the chain of

logic necessary to justify the moratorium as follows: “If

evictions occur, some subset of tenants might move

from one State to another, and some subset of that

group might do so while infected with COVID-19.” Id.

at 2488. This Court rejected the administration’s reliance on this “downstream connection between eviction

and the interstate spread of disease.” Id. Similarly

here, the Department of Education’s theory is based

entirely on a downstream connection between debt relief and student loan defaults, a theory under which

the Department claims it can exercise vastly more

power than it needs to address the specific alleged

problem.

Finally and most recently, this Court returned to

the theme of novelty when it struck down the EPA’s

claim of authority to impose a regulation that would

have limited the amount of electricity produced by coal

plants nationwide. West Virginia, 142 S. Ct. 2587. The

Court once again rejected the government’s reliance on

an extended chain of cause and effect to justify the

newfound power. EPA claimed that it could place limits on the total number of coal plants nationwide since

one effect of such a mandate would be to “reduce air

pollution from power plants, which is EPA’s bread and

15

butter.” Id. at 2613. But the Court rightly rejected the

notion that an agency can claim breathtaking new authority simply because it might be one means of

achieving more traditional agency goals. The Court

pointed out by analogy that it “would not expect the

Department of Homeland Security to make trade or

foreign policy even though doing so could decrease illegal immigration.” Id. at 2613.

As the Court noted in West Virginia, the government’s discovery of a power to enact nationwide debt

relief “conveniently enabled it to enact a program” that

“‘Congress considered and rejected’ multiple times.”

Id. at 2614 (citations omitted). See Nebraska Resp. Br.

at 6 (“Congress considered—but rejected—a COVID–

relief bill that would have discharged up to $10,000 in

student–loan debt for some borrowers.”); see also Elizabeth Goitein, Biden Used ‘Emergency Powers’ to Forgive Student Debt? That’s A Slippery Slope, Wash. Post

(Sept. 1, 2022) (“Since March 2020, several lawmakers

have introduced bills that would forgive $10,000 or

more in student debt. Although one passed the House,

none has made it through the Senate. In other words,

Congress has chosen not to pursue this policy.”).9

While not determinative, this history is evidence

that the policy question is a major one, since it is one

that Congress gave its attention to. See West Virginia,

142 S. Ct. at 2620–21 n.4 (Gorsuch, J., concurring) (the

existence of failed legislation “help[s] resolve the antecedent question whether the agency’s challenged

9 Available at https://wapo.st/3H2zjW7.

16

action implicates a major question”). And in addition,

this history also strongly suggests that the administration’s legal reasoning is outcome-oriented and

pretextual. All evidence indicates that the government

suddenly discovered the power to enact debt relief not

because it is legally plausible but instead because it is

politically desirable.10 “‘The importance of the issue,’

along with the fact that the same basic scheme [the

Department of Education] adopted ‘has been the subject of an earnest and profound debate across the country, . . . makes the oblique form of the claimed delegation all the more suspect.’” West Virginia, 142 S. Ct. at

2614 (quoting Gonzales v. Oregon, 546 U.S. 243, 267–

68 (2006)).11

Thus, for many of the same reasons that each of

the above three cases were Major Questions cases, this

is also a Major Questions case. The HEROES Act has

10 See Somin, supra (“In reality, the administration’s emergency

rationale here is blatantly pretextual, . . . . Under the guise of

addressing the Covid emergency, Biden is seeking to achieve a

longstanding left-wing policy goal that he couldn’t push through

Congress.”); Shugerman, supra (“[T]he administration’s COVID

explanation seems to be just a pretext for a broader program. The

Biden administration offers no hint that its program would focus

on COVID or proof of COVID causation, because COVID is not

the real reason for sweeping debt relief.”); Goitein, supra

(“Against this backdrop, Biden’s action looks less like a temporary

exercise of power to address a sudden, fast-moving crisis and

more like a work-around to implement a long-term policy that

lacks the necessary support in Congress.”).

11 See also Goitein, supra, (“[U]sing [emergency powers] to get

around Congress, when Congress has considered a course of action and rejected it, is a clear misuse of emergency powers.”).

17

never before been invoked to enact student debt forgiveness, let alone $400 billion of debt forgiveness. Indeed, until the government abruptly announced in August of 2022 that it would rely on the HEROES Act for

that authority, there had been no serious discussion

that this statute could bear the legal weight of such a

plan. And just as in the above three cases, the Department of Education here asserts for itself a novel and

highly consequential power simply because one of the

(many, massive) effects of exercising that power might

be a legitimate agency goal (reducing defaults). The result is an assertion of “highly consequential power beyond what Congress could reasonably be understood to

have granted.” West Virginia, 142 S. Ct. at 2609.

Because this is a Major Questions case, this is an

easy case. “[T]he Government must—under the major

questions doctrine—point to ‘clear congressional authorization’” to enact nationwide student debt forgiveness. Id. at 2614 (quoting Util. Air Regul. Grp. v.

EPA, 573 U.S. 302, 324 (2014)). But as noted in the

previous section, the statutory text does not include

any authorization for such an action, let alone a clear

authorization. Even if the question whether $400 billion in debt relief is “necessary” to reduce the harms of

default were a close one, there is no doubt that it falls

short of the clear-statement standard. Just as the

word “system” could not bear the weight of a nationwide cap-and-trade emissions scheme in West Virginia, the HEROES Act’s “vague statutory grant is not

close to the sort of clear authorization required by [this

Court’s] precedents.” Id. at 2614.

18

III.

THE DEBT-FORGIVENESS PLAN IS BAD

POLICY THAT WILL HAVE BAD CONSEQUENCES

To be sure, the administration’s debt-forgiveness

plan would be illegal whether it were good policy or

bad. The right of the people to make major policy decisions through their elected representatives is equally

usurped whether a statute is misused to achieve the

ends of a Democratic administration or a Republican

one, whether those ends are conservative or progressive, and whether wise or unwise.12 It would be equally

illegal if a Republican president used a statutory authority to “reduce average IRS audit times” as a pretext to unilaterally cut $400 billion in federal income

taxes, especially if that action came soon after a bill

proposing the same policy failed in Congress.

Nonetheless, the administration’s debt-forgiveness plan is indeed bad policy that would have serious and harmful consequences.13 In this instance,

the system of checks that the Framers designed has

done its job to winnow out a harmful policy choice. If

the administration were allowed to ignore Congress’s

12 See Shugerman, supra (“No matter which party is in power, no

matter how well-intentioned a policy is, this approach is a dangerous one, and the Biden administration should know better.”);

Goitein, supra (“[S]idelining Congress through emergency powers

means sidelining the checks and balances that safeguard our liberties and democracy.”).

13 See generally Neal McCluskey, Biden Student Debt Cancella-

tion Proposal: Even Worse than Expected, Cato at Liberty (Aug.

24, 2022), https://bit.ly/3R50p3w.

19

judgment and enact the rejected policy anyway, the

benefits of that system of checks would be nullified. As

this case demonstrates and as the Framers knew, unilateral policy is often bad policy.

Further, the scale of the negative effects that are

likely to result from the debt-forgiveness plan serves

to underscore—if there was any doubt—that the action

is a major policy decision to which the Major Questions

Doctrine applies.

A. Student Debt Forgiveness Would Likely

Lead to Price Inflation

One of the biggest problems in higher education

is its rapidly increasing price, rising far faster than the

rate of inflation. The inflation‐adjusted tuition, fees,

room and board at four‐year, nonprofit private colleges

has ballooned from $27,720 in the 1990–91 school year

to $51,690 in the 2021–22 school year, an 86 percent

increase. See Neal McCluskey, Top Five Reasons Federal Student Debt Cancellation Is a Bad Idea, Cato at

Liberty (Aug. 23, 2022).14 At public four‐year institutions, that cost rose from $10,430 to $22,690, a 118 percent increase. Id. And this trend has been accompanied by a huge increase in aid per student.

Much research has shown that aid fuels college

price inflation, including a Federal Reserve Bank of

New York finding that for every 1 dollar increase in

“subsidized” student loans, colleges raise their prices

60 cents. David O. Lucca et al., Credit Supply and the

14 Available at https://bit.ly/3Hr0Txx.

20

Rise in College Tuition: Evidence from the Expansion

in Federal Student Aid Programs, 32 Rev. Fin. Stud.

423 (2018). Mass cancellation will likely incentivize

much greater inflation as neither colleges nor prospective students will believe future loans will have to be

repaid. The most likely result will be students taking

out even greater amounts of “subsidized” loans than

they have before, leading to even larger increases in

college price tags. See, e.g., Jenna A. Robinson, The

Bennett Hypothesis Turns 30, James G. Martin Ctr. for

Acad. Renewal (2017) (summarizing economist Howard Bowen’s hypothesis that there is “virtually no limit

to the amount of money colleges and universities can

spend”).

B. Student Debt Forgiveness Does Not Target

Those Most in Need of Aid

People who go to college, and especially who get

degrees, typically garner big earnings increases and

job security that makes them among the least in need

of help. The average person with a bachelor’s degree

will earn an estimated $1.2 million more over their

lifetime than someone topping out at a high school diploma. McCluskey, Top Five Reasons, supra. For someone with a graduate degree—and student debt is disproportionately taken on for graduate study—that

earnings premium rises to between $1.6 and $3.1 million. Id.

In addition to huge earnings increases, people

who attended college have much greater job security

than those who did not, and this benefit was especially

21

stark during COVID-19 lockdowns. In April 2020, the

unemployment rate only hit 8.4 percent for college

graduates, versus 17.6 percent for Americans topping

out at a high school diploma and 21.1 percent for workers with less than that. U.S. Bureau of Labor Statistics, Unemployment Rates for Persons 25 Years and

Older by Educational Attainment (last visited Feb. 2,

2023).15

There is no reason that people in such a good financial position should not repay taxpayers, roughly

two‐thirds of whom do not have bachelor’s degrees.

The debt-forgiveness plan will “provide a windfall for

those who don’t need it—with American taxpayers

footing the bill.” Editorial, Biden’s Student Loan Announcement Is a Regressive, Expensive Mistake, Wash.

Post (Aug. 24, 2022).16

C. Student Debt Forgiveness Comes at an

Enormous Cost to Taxpayers

Just how much will taxpayers be on the hook for?

Exactly how expensive the debt forgiveness program

will be is uncertain—it depends on how many people

apply, how many would have used other forgiveness

programs, and more—but estimates range from the

administration’s optimistic figure of about $380 billion

up to a Penn Wharton estimate of as much as $520 billion. See Neal McCluskey, Biden’s Student‐Debt Cancellation Refutes Itself, National Review (Online) (Oct.

15 Available at https://bit.ly/3JiqcD8.

16 Available at https://wapo.st/3Hr2Slt.

22

19, 2022).17 Cato’s Neal McCluskey estimates a cost of

roughly $427 billion, which would be nearly 36‐times

greater than the federal government spent on Head

Start in 2022. McCluskey, Worse than Expected, supra.

This would also be nearly two‐and‐a‐half times larger

than the U.S. Army’s 2022 budget. Id.

Given the enormous financial cost of this program

relative to others in the federal budget, it is not surprising that the American taxpayers’ representatives

in Congress refused to assent to such a plan. That was

a policy decision that the administration should have

respected.

CONCLUSION

The government’s student loan debt-forgiveness

plan is not authorized by the HEROES Act of 2003 and

should be vacated.

........................................... Respectfully submitted,

Ilya Shapiro

MANHATTAN INSTITUTE

52 Vanderbilt Ave.

New York, NY 10017

(212) 599-7000

ishapiro@

manhattan-institute.org

February 2, 2023

17 Available at https://bit.ly/3J9MfvT.

Anastasia P. Boden

Counsel of Record

Thomas A. Berry

Isaiah McKinney

CATO INSTITUTE

1000 Mass. Ave., N.W.

Washington, DC 20001

(202) 216-1414

aboden@cato.org