Biden’s latest student loan payment extension is unlawful

President Biden’s latest student loan repayment extension is probably unlawful. While the earliest delays were at least plausibly tied directly to the pandemic emergency, as the HEROES Act requires, each successive delay has been less and less reasonable. With this latest delay, tied to litigation instead of the emergency, the Biden administration has clearly lost the thread.

The HEROES Act requires that when the secretary of education amends the law (separation-of-powers alarm bells should ring here) regarding student loans, the people helped must have “suffered direct economic hardship as a direct result of a … national emergency.”

In early 2020, it was at least arguable that with businesses and schools closed nationwide and many people no longer receiving a paycheck due to the COVID-19 emergency, millions would be strained financially if they had to keep paying down their student loan balances. A year later, as many more people were laid off or fired because they chose not to be vaccinated, it was arguable that people nationwide would still be directly harmed financially if they had to make payments.

But now it is almost 2023. The number of unfilled jobs in the United States crossed 11 million and remains near that level — about 4 million more than before the pandemic was declared. Borrowers in the United States are already far from “direct economic hardship” and far into indirect effects, at best.

Regardless of the state of the economy, however, the U.S. Department of Education argues that whenever loan payments restart, higher proportions of poorer people than usual will default on their student loans, so it’s time to extend the repayment moratorium yet again. This argument, however, is unrelated to the pandemic response. Rather, it is based largely on financial difficulties that predate the pandemic, such as borrowers taking on high amounts of debt in relation to expected income from a college degree.

This September, President Biden declared that “the pandemic is over.” Moreover, in August he declared that repayments would be delayed “one final time” through Dec. 31. His extension of the national emergency is set to expire in January (although it is expected to be renewed through April 2023). For its part, the Senate approved a resolution to end the emergency.

None of this has stopped Biden from delaying payments yet again. On Nov. 22, the Education Department abandoned the pretense that the COVID-19 response was somehow still making loan repayment difficult. Instead, it said this latest delay was intended merely to “alleviate uncertainty for borrowers” while the administration asks the Supreme Court to lift the injunction against the student loan bailout.

The bailout is illegal, unfair and extremely expensive (half a trillion dollars). As of Thursday, Dec. 1, three federal courts and the Supreme Court have said that the department may not go forward with that scheme. The Eighth Circuit stopped the administration from forgiving any loans under the plan, and the Supreme Court declined to lift the injunction, scheduling arguments for February. A Texas judge invalidated the whole scheme, finding it unlawful, and the Fifth Circuit then refused to let the department move forward while the appellate court reviews his opinion.

It is now clear that the Biden administration based its decision on the litigation rather than, as the HEROES Act requires, direct financial harms due to the pandemic response. “Uncertainty for borrowers” comes nowhere near the requirements of the law.

Payments have never been set to resume at some special date calculated to be when more than 40 million Americans are all financially ready to pay, and the latest pause continues that failure. Instead, if the litigation is not resolved by June 30, 2023 (months after the emergency declaration will have expired), payments will resume 60 days after that — meaning the end of August.

The litigation could take years, and nobody should believe the Education Department anymore when it says a repayment extension is the last one. Governments love emergency powers and hate giving them up.

What’s different this time is that not only is the bailout illegal, but now even the student loan pause is probably illegal. A hard question is: Who has standing to sue? A recent estimate shows that the pause is costing $8.5 billion per month, all costs considered. But it’s virtually impossible for taxpayers to gain standing in court and sue to put an end to the administration’s extravagant largesse.

The HEROES Act was meant to help only American military members. Determined not to let a crisis go to waste, the administration has distorted it beyond recognition. Let’s hope that the U.S. House of Representatives, under new leadership in January, asserts its lawmaking prerogative and sues the Department of Education over this abuse.

Adam Kissel is a visiting fellow in The Heritage Foundation’s Center for Education Policy. He is former deputy assistant secretary for higher education programs at the U.S. Department of Education. Follow him on Twitter @kissel_adam.