The president can’t just spend money without congressional approval, right? That’s the foundation of separation of powers. But since COVID, Presidents Trump and Biden both spent money deferring student debts to the federal government even after Congressional authority expired. New Civil Liberties Alliance litigation counsel Sheng Li is fighting that in the courts, and I speak with him about it for the Overton Window podcast.

The Department of Education paused federal student debts in March 2020. That is, the people who borrowed from the federal government to go to college weren’t required to make payments on their loans, and their loans would not increase for nonpayment during the pause, which goes on to this day. “The Congressional Budget Office has estimated that it costs about $5 billion a month,” Li notes. “If you add that all up, it gets pretty close to $200 billion of interest.”

Except at that point, Congress had not given the Department of Education the power to pause student loans. It did later, but that authority expired in September 2020. Trump, who directed the Department of Education at the time, decided that he liked the pause and wanted to continue it even without legislative approval. Biden followed Trump’s lead.

Li argues that the president does not have the authority to do that. “All spending has to go through Congress. Article I makes that pretty clear,” Li says.

In addition to pausing student loans, the president also said that he could borrow money to pay off some students’ debts. “That got on people’s nerves,” Li says. A number of people sued the government about it, and the United States Supreme Court recently declared that it was an unconstitutional expense.

“It didn’t deal with the pause that’s been going on. But, if you read the dissent closely, Justice Kagan said that the reasoning of the majority opinion would also shut down the student loan pause,” Li says. Kagan likely believes these policies should continue, and she recognized that the rationale for rejecting the constitutionality of the debt payments will apply to the pause.

“The Supreme Court’s decision actually had nothing to do with the wisdom of student loan cancellation or the specific content of the Biden Administration’s policy,” Li says, “All Justice Roberts’ majority opinion did was reiterate what Democratic Speaker of the House Nancy Pelosi said in 2021, ‘People think that the President of the United States has the power of debt forgiveness. He does not. That has to be an act of Congress.’

“I don’t think that’s a very controversial decision.”

Li also suspects that Biden knew that it would be unconstitutional. “He campaigned on cancelling loans, and when he got into office he repeatedly asked Congress,” Li says. “Only after Congress said no did he go back and say that there’s this 20-year old law, that nobody paid attention to, that gave him this power all along. So if he really thought he had this power, why would he waste all this time asking Congress instead of unilaterally acting in the first place?”

Less attention was given to the pause compared to the cancellation, and Li is trying to get more interest in his case. “The pause, in some ways, is even more unfair than the proposed cancellation that was struck down by the Supreme Court,” Li says. The effects of the pause benefit the wealthy and the most well off, and people on both sides of the aisle tend to be skeptical of the need to subsidize people who don’t need help.

That’s because the biggest borrowers are the people who go to expensive graduate schools, and they also tend to earn the most after graduation. “The average law student who benefited from this got about $40,000 in benefits from not having to pay their interest, whereas the average undergraduate only got about $5,000,” Li says.

He is excited about the progress the court is making at reviving the separation of powers. “For the first time in maybe 50 or 60 or 70 years they’ve strengthened the guard rails around the administrative state and the executive branch,” Li says.

“One of the doctrines that has grown from this is the major questions doctrine,” Li says, which requires an agency to have specific and clear congressional approval to address questions that have major political or economic consequences.

“Congress has used very broad language to delegate regulatory power to the agencies, and agencies have seized upon those broad delegations,” Li says. In his case, the loose justification the Biden administration used for the pause came from a 2003 law that let administrators defer Afghanistan and Iraq soldiers’ student debts. They argued that it authorized them to defer everyone’s student debts.

It used to be understood that if the president overstepped his authority, Congress would respond with an act clarifying the controversial point. “But what the courts have learned is that this is not what happens at all. Instead, if you’re an individual congressmen, you love to delegate broad power to the executive agency so you don’t have to make hard decisions,” Li says. “Congress is happy to shirk their legislative responsibilities and instead let the president take action.”

He also thinks that courts putting bounds on the administration will force Congress to take back their authority. “We’ve actually seen some legislative progress in maybe not all the things each voter wants, but in things where Congress could reach a consensus,” Li says, citing the debt ceiling, infrastructure spending, and gay marriage provisions passed by Congress.

“One precedent builds upon another,” Li says. “The student loan decision didn’t come from just itself. There’s been a line of cases. His latest case is another step in the reinvigoration of the basic separation of powers at the center of the American republic.

Check out the conversation at the Overton Window podcast.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.