After NCLA Pressure, Department of Education Scraps Illegal Student Debt Cancellation Plans

Washington, D.C., Dec. 20, 2024 (GLOBE NEWSWIRE) — Today, as the New Civil Liberties Alliance requested, the U.S. Department of Education announced the withdrawal of proposed rules that would have combined to unconstitutionally cancel more than $250 billion of federal student loan debt owed to the Treasury. NCLA had submitted comments in May 2024 and again in December urging the Department to abandon these plans, pointing out that Congress has repeatedly declined to erase such debt, and the Department lacks legal authority to do so unilaterally. NCLA celebrates this important victory in preventing abuse of executive power.

The Department’s proposals, published in April and October, would have cancelled hundreds of billions of dollars at taxpayer expense. The first plan included a wide range of loan-cancellation proposals, which the Department estimated to amount to nearly $150 billion in total. The second plan would have cancelled at least $112 billion for borrowers whom the Department deemed to be in “hardship” based on a 17-factor test that the Department invented out of thin air.

Despite withdrawing these plans, the Department still claims a section of the Higher Education Act of 1965 gives the Secretary of Education unfettered power to cancel any federally-held student loan debt. But the statute had never been invoked to broadly cancel student loan debt owed to taxpayers before, cannot be read plainly to that effect, and was never understood to authorize such action in the past. The government’s inaccurate reading of the law would have rendered other, pre-existing loan forgiveness programs completely superfluous. The Supreme Court’s Major Questions Doctrine, barring federal agencies from resolving matters of “vast economic and political significance” without explicit congressional authorization, forbids the Department’s proposals. The withdrawn plans would also have violated the Appropriations and Vesting Clauses in Article I of the Constitution, which reserves all legislative authority and power of the purse for Congress. NCLA will continue to hold the Department accountable for such plans to act far beyond its legal power.

NCLA released the following statement:

“The Department has repeatedly attempted to cancel student loans unlawfully for years, with courts halting each of these schemes. We are happy to see that the Department has finally learned its lesson and is withdrawing these two latest unlawful loan-cancellation plans.”
— Sheng Li, Litigation Counsel, NCLA

“NCLA is glad to see the Biden Administration withdraw these two unlawful proposals to cancel student loans, but it should withdraw the rest of the unlawful proposals the administration has made to cancel student loans at the same time.”
— Mark Chenoweth, President, NCLA

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ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

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