The Mackinac Center will not give up its fight against the Biden administration’s unconstitutional efforts to put taxpayers on the hook for student loan debt. President Biden has tried in many ways to skirt congressional authority for this costly and unpopular giveaway to a favored constituency, and we will keep opposing those attempts.
In April we joined the New Civil Liberties Alliance in a lawsuit challenging the administration’s authority to pause student loan payments and interest. By that time, the debt pause had cost taxpayers more than $150 billion. Soon after, the United States Supreme Court struck down the Department of Education’s attempt to forgive $430 billion in student loan debt on the grounds that such an act required congressional authority.
Now the department is attempting yet another workaround that would circumvent the separation of powers established in the Constitution. This new plan relies on the Public Service Loan Forgiveness and Income-Driven Payment programs, which allow debt to be discharged after borrowers make a certain number of qualifying payments.
The department implemented what it called a “One-Time Account Adjustment” for borrowers under these plans by treating borrowers who had entered forbearance as if they had made qualifying payments during the forbearance period. This step would discharge $39 billion in debt and bail out 3.6 million borrowers.
This is just the tip of the iceberg, however, since the fix is prospective as well. When applied to future borrowers, this new scheme would cost taxpayers as much as $175 billion.
That’s why the Mackinac Center, alongside the Cato Institute, once again joined forces with the New Civil Liberties Alliance to challenge the unlawful bailout by filing a lawsuit in August.
This plan is as bad as prior attempts at student loan forgiveness. In all three instances, the executive branch, without authority from Congress, has attempted to appropriate billions of dollars. The Constitution expressly delegates the power of the purse to Congress alone. By usurping that authority, Biden is violating the separation of powers principle that provides essential checks and balances against government overreach.
Equally troubling is the method by which these changes were enacted. Typically, when an administrative agency acts, it must do so through a rulemaking process that requires public input on the proposed rule. Here, the new forgiveness plan was simply announced via press release. By sidestepping the legal process, the Education Department violated the law.
Although the trial court in this case ruled that neither the Mackinac Center nor the New Civil Liberties Alliance has standing to sue, we have filed an appeal to the 6th Circuit Court of Appeals. We are proud to keep fighting to preserve the separation of powers, and we will always hold government accountable to its constitutional limits.