President Biden has directed the Department of Education to implement a national program of blanket cancellation of federal student loans. The Department has complied by announcing two debt-cancellation programs. The first program—a plan to cancel $10,000 of loans per debtor—proceeds under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES) Act. On February 28, 2023, the Supreme Court heard argument in two cases challenging the Department’s claim of statutory authority for this program (Nebraska v. Biden and Department of Education v. Brown).
Less well known—but equally significant—is the Department’s other loan-cancellation program. This program is being accomplished through settlement of a nationwide APA class-action that was brought solely to compel the Department to restart lawful adjudications of “borrower-defense” claims. Instead of defending against this limited claim, the Biden Administration has instead entered a settlement agreement that dispenses with adjudication and automatically cancels billions in loans for hundreds of thousands of debtors. The Department claims it has authority for this blanket loan-cancellation program under the Higher Education Act—a claim that would apply to all loans even outside of litigation. A federal district court approved the settlement in November, but several intervening educational institutions have appealed to the Ninth Circuit.
Is this settlement legal? Is it an example of the reemergence of the sue-and-settle practices of the Obama Administration? How does this case intersect with Nebraska and Brown? Join us for a discussion with Jesse Panuccio, who represents one of the appealing intervenors.
Jesse Panuccio, Partner, Boies Schiller Flexner LLP
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