Proposed student loan bailout rule makes no sense

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As the Federal Register approached its previous record of 95,894 pages in a year (set in 2016), the Biden administration devoted a few more pages there to a familiar subject: canceling student loan obligations. On Halloween, the Department of Education published a notice of proposed rulemaking on "Student Debt Relief Based on Hardship." CEI submitted comments critical of the proposal.

The bailout the Department proposes this time seems scarcely more plausible than the previous one, which was illicitly premised on the Higher Education Relief Opportunities for Students Act of 2003.

The proposed rule would cancel a student loan if the costs of enforcing the debt are not justified by what would likely be collected or if the secretary of education determines that the debtor is experiencing hardship that would impair his ability to repay the government. The Department's asserted authority this time is found in statutes authorizing the secretary of education to "compromise, waive, or release any right, title, claim, lien, or demand, however acquired." Upon that authority, the proposal would allow the Department to systematically dispose of accounts receivable held or guaranteed by the United States worth billions of dollars whether or not they are ultimately collectible. The Department has not been granted authority for this largesse. The Constitution grants Congress "Power to dispose of . . . Property belonging to the United States." U.S. Const. art. IV, § 3, cl. 2. Congress may delegate that power to the executive branch if it provides standards for a reviewing court to tell whether the will of Congress has been obeyed. The statutes the Department relies upon contain no standards that would in any way guide determinations to waive student loans because of hardships.

Even if the Department had authority for the bailouts it proposes, the proposal would have to be substantially rewritten to make any sense. The proposal was written by a committee, and it shows. In numerous places the proposed rule is unclear and inconsistent with the Department's explanation of it in the preamble, which in turn is internally inconsistent.

Because the proposed rule is opaque, disorganized, and unauthorized, CEI advised the Department to take no further action on it other than referring the issue of its proper objectives to a new committee under the auspices of the forthcoming Department of Government Efficiency.