NCLA Asks en Banc Sixth Circuit to Stop Unlawful Biden Scheme to Cancel Student Loan Debt
July 01 2024 - 6:13PM
Today, the New Civil Liberties Alliance petitioned the en banc U.S.
Sixth Circuit Court of Appeals to hear the Mackinac Center for
Public Policy, Cato Institute v. Cardona case for halting the
Department of Education’s illegal erasure of $39 billion of student
loan debt and counting. The Department’s scheme has already begun
wiping out debt that borrowers owe under the Public Service Loan
Forgiveness (PSLF) and Income-Driven Repayment (IDR) programs, by
crediting non-payments during periods of forbearance as monthly
payments via a “One-Time Account Adjustment.” On behalf of the
Mackinac Center and the Cato Institute, NCLA calls on the en banc
Court to stop this plot that disregards federal law, the
Constitution, and the U.S. Supreme Court.
Moving on an accelerated schedule to deter court
review, the Department of Education announced the unlawful plan in
July 2023 before the ink was dry on the Supreme Court
opinion striking down its old $430 billion student loan debt
cancellation plan. The Administration’s policy counts certain
non-payment periods as “monthly payments” needed to qualify for
loan-forgiveness programs. Doing so results in cancellation of debt
for borrowers who have not yet satisfied mandatory statutory
conditions for forgiveness.
The Department of Education’s decree violates
the Constitution’s Appropriations Clause, which grants Congress
exclusive authority to expend taxpayer funds to pay for debt
cancellation. The cancellation further violates loan-forgiveness
statutes that require participating borrowers to make a specific
number of monthly payments before having their loans forgiven.
Additionally, instead of promulgating the plan through the required
notice-and-comment and negotiated rulemaking process under the
Administrative Procedure Act, the Department simply issued a press
release announcing its wishes that did not bother to identify any
laws to justify the plan.
Cancelling borrowers’ debt through this scheme
erases their incentive to participate in the Public Service Loan
Forgiveness (PSLF) program by completing ten full years of work for
qualified non-profit employers while making monthly payments. The
Administration’s substitute plan thus directly harms non-profit
organizations that benefit from PSLF like the Mackinac Center and
the Cato Institute, and undermines Congress’s goals in enacting the
PSLF program. In May, a Sixth Circuit panel erroneously rejected
this standing argument in Mackinac Center for Public Policy,
Cato Institute v. Cardona.
The panel improperly held that the economic
disadvantage that Administration’s plan creates for NCLA’s clients
compared to competitors was not enough to give them standing
against it, failing to draw factual inferences in the Plaintiffs’
favor and ignoring uncontroverted allegations that support their
standing. The panel further decided that that competitor standing
does not exist because the “Adjustment” is directed only at
third-party borrower-employees rather than the for-profit employers
against whom Plaintiffs compete in the labor market. This standard
would prevent judicial review of any unlawful government action
that imposes economic disadvantage, as long as it strategically
does so only through third parties like competitors’ employees. The
en banc Court should correct these serious mistakes.
NCLA released the following statement:
“The panel decision rejecting competitor
standing inexplicitly refused to accept uncontroverted facts, like
that non-profit think tanks compete against for-profit companies
for college-educated employees and that counting 36+ months of
non-payments toward the 120 monthly payments needed to receive
public service loan forgiveness reduces the number of monthly
payments that a borrower must make. En banc review is needed to
correct these glaring errors.”— Sheng Li, Litigation
Counsel, NCLA
For more information visit the case
page here.
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.
Ruslan Moldovanov
New Civil Liberties Alliance
202-869-5237
ruslan.moldovanov@ncla.legal