ALF Argues That Half-Trillion Dollar Student Debt Cancellation Is Unconstitutional

Last October, less than a month before the mid-term election, the Biden administration announced mass cancellation of student loan debt owed to the federal government by approximately 20 million borrowers. The Congressional Budget Office estimates that under the program—which is currently enjoined—more than $400 billion in student debt would be wiped out. Other estimates exceed a half-trillion dollars.

The Supreme Court has taken the unusual step of agreeing to review challenges to the validity of the mass student debt cancellation even though proceedings in federal courts of appeals have not concluded.  Back-to-back oral arguments before the nine Justices are scheduled for February 28.

ALF has filed an amicus brief arguing that even if the Court were to conclude that the student debt cancellation program is authorized by statute, it nonetheless is unconstitutional because it violates the Appropriations Clause of the Constitution. This Clause, which is fundamental to the separation of powers, gives Congress exclusive control over “the power of the purse,” meaning that every Executive Branch expenditure must be authorized by a congressional appropriation.  ALF contends that the Executive Branch’s abrogation of a half-trillion dollars in student loan debt assets held by the Treasury is an unappropriated expenditure, and thus, violates the Appropriations Clause and is unconstitutional.

The amicus brief was co-authored by ALF Executive Vice President & General Counsel Larry Ebner and his former, long-time law partner, Herb Fenster, who is a nationally recognized expert on federal appropriations law.

Issue Areas:

Limited Government

Case:

Read the Amicus Brief:

Question(s) Presented:

1. Whether the Respondents (plaintiffs below) have Article III standing.
2. Whether the student loan debt relief program exceeded the Secretary of Education’s statutory authority, is arbitrary and capricious, or was adopted in a procedurally improper manner.
3. As ALF argues in its amicus brief:  Whether the government’s mass student debt cancellation violates the Appropriations Clause of the Constitution.

Additional Background:

Using the pretext of the COVID-19 pandemic, the Secretary of Education invoked the “HEROES Act,” 20 U.S.C. § 1098bb, as authority to initiate “student debt relief,” including mass cancellation of hundreds of billions of dollars in direct student loan debt owed to the government. The HEROES Act is primarily intended to relieve overseas, active-duty military personnel of student loan payment obligations when “necessary in connection with a war or other military operation or national emergency.”  See 87 Fed. Reg. 61,512 (Oct. 12, 2022).

Six States, led by Nebraska, sued the government in a Missouri federal district court to challenge the Secretary of Education’s statutory authority to cancel the debt. The district court dismissed the suit for lack of standing, and the States appealed to the Eighth Circuit, which issued a nationwide injunction pending appeal.

Separately, two student loan borrowers filed suit in a Texas federal district court, alleging that the Secretary of Education failed to adhere to required administrative procedures when adopting the  debt relief program. Although the district court rejected this contention, it held that the Secretary of Education lacked authority under the HEROES Act to initiate the program. The government appealed to the Fifth Circuit, which denied a stay pending the government’s appeal of the district court’s judgment.

The government applied to the Supreme Court for emergency stays of the Eighth Circuit’s injunction in the first case (Biden v. State of Nebraska, No. 22-306), and the district court’s judgment in the second (Department of Education v. Brown, No. 22-535). The Solicitor General suggested to the Court that it treat the emergency stay applications as certiorari petitions. The Court did so. It granted certiorari in both cases and established expedited briefing schedules.

ALF’s Amicus Brief:

ALF’s amicus brief argues that even if the Court were to conclude that the Secretary of Education had authority under the HEROES Act, the mass student loan debt cancellation nonetheless violates the Appropriations Clause of the Constitution. This Clause, Art. I, § 9, cl. 7, provides that: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

In plain English, the Appropriations Clause means that even if an Executive Branch program is authorized by statute, there must be a  separate, explicit, congressional appropriation covering the program’s implementation. There is no such appropriation applicable to the mass cancellation of student loan debt assets. Stripping these assets assets from the government’s books is tantamount to an unappropriated expenditure in violation of the Appropriations Clause.

ALF’s amicus brief explains that Executive Branch (and congressional) adherence to the Appropriations Clause is critical to the separation of  powers. Yet, as the brief argues,

“Even if, as the government contends, mass student debt cancellation somehow is authorized by the HEROES Act, the administration’s unappropriated, half-trillion dollar, pre-midterm election giveaway to tens of millions of potential voters violates the Appropriations Clause in a spectacular manner.”

“The Executive Branch hijacked the congressional purse strings by brazenly attempting to deplete the U.S. Treasury of hundreds of billions of dollars in student loan debt assets.”

“This congressionally unappropriated expenditure [is] exactly the type of ‘unbridled executive power’ that the Appropriations Clause is intended to prevent.”

“This unconstitutional raid on the Treasury is the latest and most egregious example of the Executive Branch’s many recurring violations of the Appropriations Clause, seemingly with congressional acquiescence.”

Status:

Back-to-back oral arguments in the two cases were held on February 28, 2023. Larry Ebner and Herb Fenster wrote a post-hearing analysis, Feds’ Student Debt Relief Defense Has Constitutional Flaws,  which Law360 published on March 2, 2023. On June 30, 2023, the Court issued a favorable opinion in Biden v. Nebraska, holding that the student debt cancellation program was not authorized by the HEROES Act, and a separate opinion in Dep’t of Education v. Brown, holding that the plaintiffs lacked standing to pursue their claims.

Contact:

ALF Executive Vice President & General Counsel Lawrence Ebner