Brown v. U.S. Dep't of Educ.
| Decision Date | 14 November 2022 |
| Docket Number | 4:22-cv-0908-P |
| Parties | Myra Brown, et al., Plaintiffs v. U.S. Department of Education, et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
The Constitution vests “all legislative powers” in Congress. This power, however, can be delegated to the executive branch. But if the executive branch seeks to use that delegated power to create a law of vast economic and political significance, it must have clear congressional authorization. If not, the executive branch unconstitutionally exercises “legislative powers” vested in Congress. In this case, the HEROES Act- a law to provide loan assistance to military personnel defending our nation-does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program. The Program is thus an unconstitutional exercise of Congress's legislative power and must be vacated.[1]
The Department of Education (“Department”) offers two types of financial aid to help students pay for their college education-grants and loans.[2] Grants do not have to be repaid. Id. But loans do. Id. Title IV of the Higher Education Act of 1965 (“HEA”) covers the administration of three types of federal student loans: (1) Direct Loans; (2) Federal Family Education Loans (“FFEL”); and (3) Perkins Loans. See 20 U.S.C. § 1070.
With Direct Loans, the federal government provides loans directly to borrowers, who are responsible for repaying the government. See 20 U.S.C. § 1087a. With FFEL the federal government pays lenders to offer student loans and the federal government guarantees their repayment. 20 U.S.C. § 1071. With Perkins Loans, colleges loan money to students, and the federal government guarantees their repayment. § 1087aa. The HEA also provides how to pay these loans, repayment options, and loan forgiveness. See, e.g., 34 C.F.R. § 685.219; 20 U.S.C §§ 1098e; 1087e(d)(1); 1078(b)(9)(A)(v).
With rising college costs, federal student-loan debt has skyrocketed to more than $1.61 trillion with 43 million borrowers.[3] As a result, there have been multiple attempts to enact legislation to help alleviate student-loan debt. For example, in 2019, Senator Elizabeth Warren introduced a bill to provide $50,000 in debt forgiveness for those who make under $100,000. See S. 2235, 116th Cong. (2019). Similarly, Representative Al Lawson introduced a bill to forgive the outstanding loan balance of all borrowers who make under $100,000 individually or $200,000 if married and filing taxes jointly. See H.R. 2034, 117th Cong. (2021). But both bills failed.
The executive branch has also recently explored its ability to forgive student loans. Specifically, the Trump administration considered its statutory authority under the Higher Education Relief Opportunities for Students Act of 2003 (“HEROES Act”) to forgive student loans due to the COVID-19 pandemic. But the Department concluded that it lacked such authority.[4] House speaker Nancy Pelosi agreed with the Department's conclusion: [5]
President Biden, however, promised to “forgive all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities for debt-holders earning up to $125,000” while campaigning for the presidency.[6] After becoming president, Biden instructed the Department to prepare a memorandum exploring possible legal avenues to justify a loan-forgiveness program.[7]
The Department did so but changed its tune-concluding that the HEROES Act allows the executive branch to create a loan-forgiveness program to address the financial harms of the COVID-19 pandemic.[8]The next day, the White House announced that the President would “fulfill [his] campaign commitment” by providing debt forgiveness to millions of borrowers.[9] C. The HEROES Act
The HEROES Act grants the Secretary of Education (“Secretary”) the authority to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the Act [20 U.S.C. 1070 et seq.] as the Secretary deems necessary in connection with a war or other military operation or national emergency.” § 1098bb(a)(1) (alteration in original). “The term ‘national emergency' means a national emergency declared by the President of the United States.” § 1098ee(4).
The waiver or modification must also “be necessary to ensure that” certain objectives are achieved. § 1098bb(a)(2). The first of those objectives is “to ensure that . . . recipients of student financial assistance under title IV of the [HEA] who are affected individuals are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals.” § 1098bb(a)(2)(A). The HEROES Act defines “affected individuals” to include people who reside or are employed “in an area that is declared a disaster area by any Federal, State, or local official in connection with a national emergency” or who “suffered direct economic hardship as a direct result of a war or other military operation or national emergency, as determined by the Secretary.” § 1098ee(2)(C)-(D).
The second objective provides that “administrative requirements placed on affected individuals . . . are minimized, to the extent possible without impairing the integrity of the student financial assistance programs, to ease the burden on such students and avoid inadvertent, technical violations or defaults.” § 1098bb(a)(2).[10] If the objectives of § 1098bb(a)(2) are met, “[n]otwithstanding section 1232 of this title and section 553 of title 5, the Secretary shall, by notice in the Federal Register, publish the waivers or modification.” § 1098bb(b)(1).
D. Student-Loan Program
The Secretary invoked its authority under the HEROES Act to create a loan-forgiveness program (“Program”) that would address the financial harms of the COVID-19 pandemic.[11] The Secretary contends that COVID-19 pandemic was declared a national emergency by President Trump in 2020 and thus a “national emergency” under the HEROES Act. Id. And according to the Secretary, every portion of the country is a “disaster area due to COVID-19,” and “every person with a federal student loan under title IV of the HEA” is an affected individual. Id.
Because the Secretary considered the objectives of § 1098bb(a)(2) met, the Secretary provided notice of the waivers and modifications in the Federal Register. Id. The notice provided that the Secretary modifies “20 U.S.C. 1087, which applies to the Direct Loan Program under 20 U.S.C. 1087a and 1087e; 20 U.S.C. 1087dd(g); and 34 CFR part 674, subpart D, and 34 CFR 682.402 and 685.212” to provide the debt relief for certain borrowers who qualify. Id. A borrower qualifies if he (1) individually makes under $125,000 or $250,000 if married and filing taxes jointly and (2) has Direct, Perkins, or FFEL loans that are not commercially held. Id. If a borrower qualifies, the Program provides $20,000 in debt forgiveness to those who have received a Pell Grant and $10,000 to those who did not. Id.
E. Procedural History
Plaintiffs Myra Brown and Alexander Taylor both have student loans. ECF No. 1 at 3-4. Brown is ineligible for any debt forgiveness under the Program because her loans are commercially held. Id. at 3. And Taylor is ineligible for the full $20,000 in debt forgiveness under the Program because he did not receive a Pell Grant. Id. at 3-4. Because Brown loses out on $20,000 in debt forgiveness and Taylor loses out on $10,000, they disagree with the lines drawn for the Program's eligibility criteria. Id. at 2-3.
Brown and Taylor, however, could not voice their disagreement because the Program did not undergo notice-and-comment rulemaking procedures under the Administrative Procedure Act (“APA”).[12] As a result, Plaintiffs sued the Department and Secretary, seeking vacatur of the Program or nationwide injunctive relief for two reasons. First, they allege that the Program violates the APA's notice-and-comment requirements. ECF No. 1 at 13-14. Second, they also contend that the Secretary lacks the authority to implement the Program under the HEROES Act. Id. at 4-5.
The same day Plaintiffs sued, they moved to enjoin the Department “from enforcing, applying, or implementing the Program.” ECF No. 4 at 14. Shortly after, Defendants filed their opposition to Plaintiffs' motion. ECF No. 24.
Along with opposing Plaintiffs' Motion for Preliminary Injunction, Defendants moved to dismiss for lack of jurisdiction, contending that Plaintiffs lack standing. See ECF Nos. 24 at 8-12; 25. And while not mentioned in their motion, Defendants at the preliminary-injunction hearing insinuated that not only do Plaintiffs lack standing, but nobody has standing to challenge the Program. ECF No. 32 at 57-58.
Because of the prejudice Plaintiffs would experience if the Court delays ruling on the merits,[13] no material facts are in dispute, and the issues here are pure questions of law, the Court-out of an abundance of caution-provided the Parties notice of the Court's intent to advance Plaintiffs' Motion for Preliminary Injunction to a determination on the merits under Federal Rule of Civil Procedure 65. See ECF No. 33. The notice provided the Parties an...
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