Conservatives launch legal fight against Biden’s potential backup plan for student debt relief

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Apr 10, 2023 View in browser   By Michael Stratford CONSERVATIVES TARGET BIDEN’S POSSIBLE ‘PLAN B’ FOR STUDENT DEBT CANCELLATION: The Supreme Court hasn’t ruled yet on whether President Joe Biden can move forward with his student debt relief plan. But conservative opponents are already waging a legal fight to stop a potential backup route for Biden to cancel student debt if the court rules against him. — Republican attorneys general last week urged the Supreme Court to weigh in on a case involving the Education Department’s authority to “compromise” debts under the Higher Education Act. That’s the legal power many progressives want the Biden to invoke as a second option to cancel student debt if his first attempt — which is based on emergency powers tied to the Covid pandemic — gets struck down by the court in the coming months. People rally in support of the Biden administration’s student debt relief plan in front of the the U.S. Supreme Court on Feb. 28, 2023, in Washington, D.C. | Drew Angerer/Getty Images — “The executive branch does not have unlimited policymaking power, nor an unlimited bank account to forgive student loan debt,” Ohio Attorney General Dave Yost, who led the coalition of 20 Republican state attorneys general in filing the amicus brief, said in a statement. “The executive branch cannot extend its authority as it sees fit.” — The latest case to reach the Supreme Court is ostensibly about a class-action settlement the Biden administration reached last year with student loan borrowers who claimed they were defrauded by their college. The Education Department agreed to discharge more than $6 billion of debt owed by more than 200,000 borrowers who attended one of about 150 schools, mostly for-profit colleges. The department says it has the power to do so under the Higher Education Act’s “settlement” authority. — Three colleges — Everglades College Inc., Lincoln Educational Services Corporation and American National University — claim they’re being unfairly maligned by the settlement and are asking the court to stop it. A key part of the argument by the colleges is that the Biden administration’s use of the Higher Education Act to justify debt relief under the settlement is illegal. — “Why is this case important? Well, this case is the backup plan” for Biden’s mass student debt cancellation, said Jesse Panuccio, a former top Justice Department official during the Trump administration, who represents Everglades College. Speaking during a Federalist Society webinar on the case last month, Panuccio, a partner at Boies Schiller Flexner LLP, said the legal justification for the settlement “may eventually become the lead theory” for mass debt cancellation. “As soon as the Supreme Court says, ‘you can’t do this under the HEROES Act,’ the Department of Education is going to pivot and say, ‘no problem, we can do this under the HEA’,” Panuccio said, adding that the administration may reason: “if we can do this for this settlement, we can cancel all student loans.” — Attorneys for the student borrowers are firing back. "These Attorneys General are inserting their political agenda in a legal case that has nothing to do with broad-based debt cancellation, on behalf of three institutions who have never once shown that they have standing in this case,” said Eileen Connor, president and director of the Project on Predatory Student Lending, which represents the borrowers. She said her clients are seeking a “fair resolution” of their student loan fraud claims, which in some cases have been pending at the Education Department since the Obama administration. — Where things stand: A federal judge in California earlier this year rejected the three colleges’ objections and approved the settlement. Last month, the 9th Circuit Court of Appeals declined to immediately stop the settlement as it hears the colleges appeals. So last week, the colleges filed an emergency request for the Supreme Court to intervene. — What to watch this week: The Biden administration and student loan borrowers are set to respond to the request for the Supreme Court to intervene in the case by Wednesday at noon. In lower courts, the Biden administration has argued that the Higher Education Act gives the education secretary “broad” powers and “considerable discretion” to compromise and settle student debt owed to the federal government. The Education Department also noted that it has previously discharged some $11.6 billion of debt under the HEA’s “compromise” authority for about 883,000 borrowers, including during the Trump administration. IT’S MONDAY, APRIL 10. WELCOME TO MORNING EDUCATION. Please send tips and feedback to the POLITICO education team: Michael Stratford (mstratford@politico.com), Mackenzie Wilkes (mwilkes@politico.com), Juan Perez Jr. (jperez@politico.com) and Bianca Quilantan (bquilantan@politico.com). Follow us on Twitter: @Morning_Edu and @POLITICOPro.   STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.     Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. WHITE HOUSE EASTER EGG ROLL CONTINUES ‘EGGUCATION’ THEME: First lady Jill Biden today will host the annual Easter Egg Roll on the South Lawn of the White House, and it’s once again going to be education-focused. — NASA this year is getting in on the “EGGucation” theme. The space agency sent a wooden White House Easter egg souvenir to the International Space Station for astronauts to teach a lesson on gravity. — The White House estimates it’ll host about 30,000 people for the annual tradition dating back to 1878, which kicks off at 7 a.m. this morning. Catch up: The Washington Post has the scoop on the egg supply chain, and CNN details a bunny costume upgrade. In Congress FIRST LOOK — WARREN, SENATE DEMS SEEK MORE CASH FOR STUDENT AID OFFICE: A group of Senate Democrats is making a new push to increase funding for the Education Department’s Office of Federal Student Aid, warning that the current level of funding “severely undermines” the administration’s ability to “implement critical programs.” Sen. Elizabeth Warren (D-Mass.) speaks during a Senate Finance Committee hearing on President Biden's fiscal year 2024 budget request on Capitol Hill March 16, 2023. | Francis Chung/POLITICO — Sen. Elizabeth Warren (D-Mass.) and 16 other senators, including HELP Chair Bernie Sanders (I-Vt.), are sending a letter to Senate appropriators today, calling on them to fully fund the White House’s request for a $620 million increase for the student aid office in the coming fiscal year that begins Oct. 1. — Congress last year rejected the Biden administration’s push to increase FSA’s funding amid a partisan dispute over whether the money could be used to implement Biden’s sweeping student debt cancellation program. Lawmakers kept funding for the office at $2 billion, the same as the previous year. — The lawmakers write that they’re concerned the lack of new funding jeopardizes a wide range of initiatives at the Education Department: a new, simpler Free Application for Federal Student Aid, which has already been delayed several months; the Biden administration’s overhauls of Public Service Loan Forgiveness and income-driven repayment; and the looming restart of monthly student payments and interest later this year. — “FSA’s responsibilities have increased to protect students and borrowers, but its federal funding has remained stagnant,” the letter says. “The lack of adequate resources creates more barriers for students to continue their education.” Education Department HEARINGS ON CARDONA’S HIGHER ED REGULATORY AGENDA: The Biden administration this week will hold three public listening sessions to discuss its next round of higher education rulemaking slated for this fall. — The Education Department will hold day-long hearings on Tuesday, Wednesday and Thursday this week to solicit public input on a wide range of higher education policies. — On the agenda: rules governing the Federal TRIO programs; third-party servicers such as online program management companies; distance education programs; accreditation; and the policies known as “cash management” that govern how colleges disburse federal aid to their students. Department officials also asked for ideas on how to improve borrowers’ awareness of income-driven repayment plans. — The hearings are a precursor to months of negotiations over potential new rules, which will be hammered out by a rulemaking panel set to start this fall. — Speaking of regulatory machinations, the White House last week floated changes to how it reviews regulatory proposals across agencies, including how agencies weigh the costs and benefits of rules. The Office of Management and Budget is also looking at how it can expand access to the meetings it holds with outside entities about forthcoming rules. Title IX HOUSE GOP READIES TRANSGENDER SPORTS BILL: House Republicans are preparing to take up legislation to restrict transgender students from playing on women’s sports teams when lawmakers return from recess next week. — The House Rules Committee may meet next week to tee up a floor vote of the bill. Amendments are due to the committee by this Wednesday. Bianca has more here.   GO INSIDE THE 2023 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO is proud to partner with the Milken Institute to produce a special edition "Global Insider" newsletter featuring exclusive coverage, insider nuggets and unparalleled insights from the 2023 Global Conference, which will convene leaders in health, finance, politics, philanthropy and entertainment from April 30-May 3. This year’s theme, Advancing a Thriving World, will challenge and inspire attendees to lean into building an optimistic coalition capable of tackling the issues and inequities we collectively face. Don’t miss a thing — subscribe today for a front row seat.     Syllabus — Federal appeals court backs teacher firing over transgender students’ names: The Associated Press. — Afghan religious scholars criticize girls’ education ban: The Associated Press. — D.C. school lottery sees uptick in applications, high school interest: The Washington Post.   Follow us on Twitter Delece Smith-Barrow @DeleceWrites Michael Stratford @mstratford Bianca Quilantan @biancaquilan Juan Perez Jr. @PerezJr Mackenzie Wilkes @macwilkes   Follow us

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