US President Donald Trump arrives to deliver a speech to workers at a Whirlpool production … [+]
President Trump said at a news conference on Friday that he plans to issue an executive mandate to address the granting of student loans to millions of Americans under the CARES Act. He provided minimal details, but indicated that payments for student loans and interest would continue to be deferred, possibly for an open or indefinite period.
The Trump administration had earlier exercised this executive authority in March to temporarily suspend student loan payments and student loans at the start of the Coronavirus pandemic. Congress later codified this in statute through the CARES Act in April.
A spokesman for the U.S. Department of Education provided additional context for the legal basis of such an executive order. The spokesman told Politico that when the president issued his first executive order on student loans in March, the basis for that order was legal authority granted by the Higher Education Act, which gives broad authority to the administration (via the Secretary or Education) to “maintain, pay, compromise, write off or release” federal government student loans.
Advocates of consumer rights and members of Congress have previously pointed to this broad authority as a sound legal basis for introducing broad forgiveness of student loans, without the need for Congress intervention. Senator Elizabeth Warren (D-Mass.) Stated during her presidency that she, if elected, would have used this authority to bypass Congress and introduce comprehensive student debt cancellation.
“The Higher Education Act gives the Department of Education the ability to change, compromise, dismiss or release student loans,” Warren wrote. “This authority provides a safety valve for federal student loan programs, allowing the Department of Education to use its discretion to cancel loans, even if they do not meet the criteria for criteria for more specific cancellation programs such as permanent disability relief.”
Other consumer advocates and student loan experts have argued that using this executive authority to cancel student loan debt is perfectly legal. The Predatory Student Lending Project notes, “We have consulted the statutory and regulatory framework for federal student loan programs administered by the Department of Education, as well as the framework and monitoring of interpretations of the budget structure of these programs. We conclude that [Senator Warren’s] proposal requires a lawful and permissible exercise of the authority of the secretary under existing law. “
Of course, President Trump has not indicated support for student loan forgiveness, and there are no indications that he plans to include any form of student loan forgiveness in his forthcoming executive order. During his administration, President Trump supported a streamlined system for processing applications for dismissal for disabled veterans, but he opposed two-party legislation that would have provided the process of granting student loans to lenders who have defrauded their schools. . Republicans in Congress have also rejected Democratic calls for broad student loan cancellation as a form of economic stimulus.
In addition, any executive order that provides widespread forgiveness of student loans may face legal challenges. Other stakeholders (such as student loan officers and debtors) could potentially challenge such a sold-out interpretation of federal regulations in court, claiming it was about what Congress meant when it wrote the Higher Education Act. If there is a legal challenge, any forgiveness of student loans can potentially be stopped by initiation pending a final decision by a federal court.
However, President Trump’s confidence in the authority of the Higher Education Act to implement executive action that could provide broad relief from student loans could be named as president in the future – by this administration, as a future one. – to introduce more sweeping unilateral relief from student loans.
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