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Federal Judge in Texas Strikes Down Biden Student-Loan Forgiveness Program

Plan is an ‘unconstitutional exercise of Congress’s legislative power,’ rules judge

The Biden administration is seeking to implement a program that would forgive student debt for millions of borrowers.

By Gabriel T. Rubin and Andrew Restuccia, WSJ

Updated Nov. 10, 2022 10:35 pm ET

A federal judge in Texas on Thursday struck down the Biden administration’s student-debt forgiveness plan, imperiling a key administration priority that would have canceled up to $20,000 in student loans for tens of millions of borrowers.

The Biden administration’s plan is an “unconstitutional exercise of Congress’s legislative power” that also failed to go through normal regulatory processes, Judge Mark Pittman of the Northern District of Texas wrote in a 26-page opinion.

“No one can plausibly deny that it is either one of the largest delegations of legislative power to the executive branch, or one of the largest exercises of legislative power without congressional authority in the history of the United States,” Mr. Pittman, an appointee of former President Donald Trump wrote.

The Justice Department is appealing the verdict, a spokeswoman said.

White House press secretary Karine Jean-Pierre criticized the ruling and said the Education Department will hold on to borrowers’ applications for debt relief so it can quickly process them if the courts allow the program to move forward.

“We will never stop fighting for hardworking Americans most in need—no matter how many roadblocks our opponents and special interests try to put in our way,” Ms. Jean-Pierre said in a statement.

Two borrowers—supported by the Job Creators Network, a conservative group—were granted standing in the case because they didn’t qualify for the program. One plaintiff had private student loans that weren’t eligible for forgiveness, while the other wasn’t the recipient of a Pell Grant, meaning he didn’t qualify for an extra $10,000 in forgiveness for which only Pell Grant recipients are eligible. The court ruled that they had been deprived of their right to voice their disagreement with the contours of the program through the usual regulatory process.

“This ruling protects the rule of law which requires all Americans to have their voices heard by their federal government,” said Elaine Parker, head of the Job Creators Network Foundation.

President Biden’s administration has contended he is on solid legal ground to use executive authority to forgive student loans.

The lawsuit is one of several brought by Republican officials and conservative groups. Another suit, brought by GOP officials in six states, is currently awaiting a ruling from the Eighth Circuit Court of Appeals, which put a preliminary pause on the program last month as it considered whether the states had legal standing.

Biden administration officials have been quietly preparing for the possibility that a court would strike down the program, according to administration officials. They have been discussing both legal and policy responses to such a move, the officials said.

Payments on federal student loans have been paused since March 2020 but are scheduled to resume at the beginning of 2023. It is unclear whether that could change in response to the court ruling.

The administration has contended that the president is on solid legal ground to use his executive authority to forgive student loans, pointing to the 2003 federal statute known as the HEROES Act, which gives the head of the Education Department the capability to waive or modify federal student-loan provisions during war or a national emergency. The administration has argued in legal memos that the pandemic is a national emergency that has made it harder for student borrowers to pay back their loans.

Judge Pittman disagreed with that legal reasoning, saying that the law “does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program.” He noted that both Trump administration lawyers as well as House Speaker Nancy Pelosi (D., Calif.) have opined that President Biden lacks the legal authority to pursue mass debt cancellation through executive order. Mrs. Pelosi said last year that Congress needed to act to wipe away student debt, but she said later she supports the program and has praised the president for proposing it.

The Biden administration is nearing a decision on student-loan forgiveness, an issue that could affect millions of Americans and reverberate in the coming midterm elections. Here are some of the key challenges complicating the final decision. Illustration: Ryan Trefes

Mr. Biden’s political advisers hoped the promise of student-debt relief would drive young voters to the polls and some young people said the issue influenced their vote in Tuesday’s midterm elections.

A poll conducted by The Wall Street Journal before the election found that key groups crucial to Democrats’ midterm chances, like young voters, strongly support the loan-forgiveness plan, though the public at large is split on the issue.

Democrats outperformed expectations in this week’s midterm election. Though Republicans are expected to take control of the House, the party fell short of the gains that many analysts and pollsters predicted. Control of the Senate remains up for grabs.

Under Mr. Biden’s program, borrowers who make under $125,000 a year are eligible for up to $10,000 in federal student-loan forgiveness and up to $20,000 in forgiveness if they received Pell Grants.

The Biden administration has said it was prepared to cancel student loans for as many as 16 million borrowers if the program was greenlighted to move forward. Millions more have submitted their income data to the Education Department but weren’t yet cleared for cancellation.

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com