George Gibbs Center for Economic Prosperity

Townhall: B⁠i⁠den’s Backdoor S⁠t⁠uden⁠t⁠ Loan Ba⁠i⁠lou⁠t⁠ Threa⁠t⁠ens ⁠t⁠o Soak Taxpayers

By: Sal Nuzzo / 2023

Sal Nuzzo


George Gibbs Center for Economic Prosperity


June 10, 2023

Sal Nuzzo and Grover Norquist

President Biden refuses to take “no” for an answer.

The Senate told him no to his scheme to cancel student debt and put the burden on taxpayers. The polls show that Americans overwhelmingly object to having those who never went to college picking up the tab for college graduates who do not want to pay back their student debts.

And the Supreme Court is expected to tell Biden “NO”—he does not have the constitutional authority to cancel student debt and drop it in the laps of taxpayers.

But Biden keeps trying to please the hard-left politicians like Bernie Sanders and AOC. He has another plan.

Biden’s Department of Education is using a class-action lawsuit as a backdoor for federal student loan bailouts. Members of Congress are rightfully questioning DOE’s motives for settling a lawsuit that will burden American taxpayers with at least $6 billion and potentially be used to circumvent the Supreme Court and cost taxpayers billions of dollars more. 

In 2018, students filed a class action lawsuit against DOE for allegedly ignoring their loan forgiveness applications through a federal program by which DOE can cancel student loan debt of graduates who claim they were misled or defrauded by a university. The relief originally sought in the lawsuit asked DOE to only review the backlog of claims and rule on them individually, which is statutory law. However, the settlement proposal far surpassed the original request for relief, and instead grants mass student loan forgiveness to 200,000 borrowers amounting to $6 billion.  

The settlement in the lawsuit has essentially evolved from a case asking DOE to do its job processing claims, into a case that could serve as a workaround if Biden’s student loan bailout plan is rejected by the Supreme Court.  

Members of Congress are concerned DOE is playing politics with taxpayer dollars. The House Committee on Oversight and Accountability and the House Committee on Education and the Workforce are questioning DOE’s motives for settling a lawsuit that will burden American taxpayers with a multibillion-dollar bailout. In a recent letter, Reps. James Comer (R-Ky.) and Virginia Foxx (R-N.C.) suggest that the settlement may have been “improperly influenced by political considerations and conflicts of interest.” 

The letter also implies that if the Supreme Court strikes down Biden’s student bailout plan, the Biden administration could attempt to use the lawsuit as the legal justification to initiate a new mass loan dismissal program, and in doing so, “hijacking the court system to enact a radical student loan cancellation agenda.”

President Biden does not have the authority to attempt such sweeping loan dismissal. Congress holds the power of the purse and should be the only government body making decisions that weigh so heavily on the American taxpayer who will be burdened with the debt. Rep. Warren Davidson (R-Ohio) introduced a bill to prevent class-based forgiveness for federal student loans without the explicit appropriation of funds by Congress. 

Biden’s overreach on student loans has caught the eye of many in Congress. Both the House and Senate showed bipartisan opposition to President Biden’s student debt relief program and voted to nullify the freeze on federal student loan payments and interest. As expected, Biden ignored Congress and vetoed the joint resolution of disapproval

Additionally, the bipartisan Fiscal Responsibility Act, which was recently signed into law, included a prohibition on DOE from extending the pause on student loan payments sixty days after June 30. Both Democrats and Republicans support restarting student loan payments.

Biden’s student loan forgiveness plan has not received overwhelming support from the American public with voters being split on student loan forgiveness. According to a recent poll, less than half of Americans support Biden’s forgiveness plan “in its current form.” This is unsurprising, considering that the plan could cost taxpayers around $400 billion. 

Biden’s student loan bailouts are saddling American taxpayers with billions of dollars of debt. American taxpayers who chose not to go to college should not have to bail out students who did. Congress should continue to investigate DOE and put pressure on the Biden administration’s mass exploitation of the American taxpayer. 

Sal Nuzzo is Senior Vice President of The James Madison Institute. Grover Norquist is President of Americans for Tax Reform.

Originally found in Townhall.