Will Your Student Loans Get Cancelled? Legally Speaking, No.

Will your student loans get cancelled? It’s 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 whether you will get your student loans cancelled essentially depends on a single legal memo that the U.S. Department of Education will deliver to President Joe Biden in the coming weeks. That may sound unfair to millions of student loan borrowers who are struggling to pay off student loans, but it’s now the reality. The latest battle over student loan cancellation between progressives and the president is no longer about policy. It’s now about the law. This memo will include a legal analysis of the president’s authority to cancel student loans unilaterally by executive order without further authorization from Congress. Based on current law, this could be another setback for student loan cancellation. While Biden can accept or ignore the recommendations contained in this non-binding legal memo, the legal analysis will likely determine whether you get student loan cancellation.

From a legal perspective, the case for student loan cancellation doesn’t look good for these 4 reasons:

1. The law doesn’t say the president can unilaterally cancel $1 trillion of student loans

A proposal to cancel up to $50,000 of student loan debt, for example, could cost up to $1 trillion. If Congress really intended for the president to have unilateral authority to cancel everyone’s student loan debt, Congress would have explicitly stated it. In 1965, Congress may not have imagined student loan debt would grow to $1.7 trillion. At the same time, Congress is not traditionally in the business of giving up its power —particularly something has large as spending $1 trillion — to other branches of government. To show clear legal support for student loan cancellation, the Education Department would have to show that Congress in 1965 intended to relinquish all responsibility for federal student loans and granted unlimited authority to the Education Department to cancel student loans at will.

The legal basis for wide-scale student loan cancellation, according to supporters of student loan cancellation, is Section 432A of the Higher Education Act of 1965. According to that legislation, the Education Department has authority “to modify, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” The language is somewhat ambiguous. First, a plain text reading could support wide-scale student loan forgiveness. The legislation, as supporters say, doesn’t mention any explicit limitations. A second reading would conclude that while the Education Department can cancel student loans, Congress granted a limited authortiy based on equitable considerations or other essential financial relief. It’s unlikely that Congress simply granted unlimited authority for the exeecutive branch to cancel unlimited student loan debt. Practically, it’s common knowledge that the Education Department can cancel student loans on a case-by-case basis. For example, Biden has cancelled at least $2.3 billion of student loans since becoming president. (You can find out here if you qualify for this student loan cancellation). The question will be whether this authority is limited or absolute. In other words, does the legislation allow the Education Department to cancel everyone’s student loan debt?

2. Student loan cancellation requires an explicit authorization from Congress

Biden wants to cancel student loans 3 ways. That said, he may not have the power to do so. That’s why as a presidential candidate and as president Biden has called on Congress to enact student loan cancellation. Why? Under the Property Clause and the Appropriation Clause of the U.S. Constitution, the…