HEROES Act at Center of Debt-Relief Legal Fight

When the Biden administration heads to the U.S. Supreme Court in February to defend its student loan forgiveness plan, arguments will likely focus on whether a nearly 20-year-old law passed in the aftermath of the Sept. 11 attacks allows Education Secretary Miguel Cardona to forgive some student loans.

The legality of using the Higher Education Relief Opportunities for Students Act of 2003 to forgive up to $20,000 of federal student loans for eligible Americans in response to the COVID-19 pandemic has already been the subject of numerous court filings and amicus briefs. Critics of the administration argue the debt-relief plan is executive overreach, while supporters say a plain-text reading of the statute provides all the authorization needed.

Clarity—one way or the other—is expected when the Supreme Court weighs in on two cases challenging the Biden administration’s debt relief. Oral arguments are scheduled for Feb. 28.

The plaintiffs in the lawsuits are six largely Republican-led states, which allege that the plan will harm state revenues and agencies that hold student loans, and two Texas residents with federal student loan debt who challenged the debt-relief plan because they wouldn’t benefit from all the provisions and didn’t have the chance to comment on the proposal. Both groups take issue with the use of the HEROES Act.

“The act requires a real connection to a national emergency,” the states’ brief says. “But the department’s reliance on the COVID-19 pandemic is a pretext to mask the president’s true goal of fulfilling his campaign promise to erase student-loan debt. Hiding the real motive, the agency attempts to connect the cancellation to the pandemic by citing current economic conditions supposedly caused by COVID-19.”

Lawyers for the Biden administration have argued that relief is necessary to ensure those affected by the pandemic aren’t in a worse position financially once student loan payments resume, which is a criterion for relief in the HEROES Act.

“Respondents’ various attempts to reconcile their contrary position with the act’s unambiguous text fall short,” the Biden administration wrote in a brief to the Supreme Court filed Jan. 4. “Their arguments rest on manufactured limits nowhere to be found in the Act; revisionist accounts of the Act’s purpose and history flatly contradicted by the Act itself; strained readings of other provisions in other statutes; and mischaracterizations of the plan and the analysis on which it is based.”

What Is the HEROES Act?

Congress passed the first version of the HEROES Act in 2001, after the Sept. 11 attacks, to allow the education secretary to waive or modify provisions of student loan programs for those affected by the attack. Congress expanded the law in 2003 so that the secretary could provide relief for borrowers affected by war, military operation or national emergency, as the secretary deems necessary. The Legislature made the act permanent in 2007.

The law defines an affected individual as someone who is serving in active duty or in the National Guard during a war, military operation or national emergency; who lives or works in area declared a disaster area by a 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,” according to the statute.

The Education Department’s Office of General Counsel during the Trump administration concluded that the education secretary didn’t have the authority under the HEROES Act to forgive or cancel federal student loans. The department’s current general counsel determined in an August memo that “nothing in the statute’s purpose, history, or any other indicia of statutory meaning” undermines the plain-text interpretation that the HEROES Act allowed the secretary to forgive student loans in response to the COVID-19 pandemic.

Former California representative George Miller, who co-sponsored the HEROES Act of 2003, agreed with that reasoning in an amicus brief. He added that arguments to the contrary are “at odds with the text and history of the act.”

“The act confers significant authority on the secretary to ease the burdens on borrowers who have been affected by unexpected national emergencies,” Miller’s brief states. “And that is exactly what the secretary has done here … This text plainly grants the secretary broad discretion to determine what relief is appropriate for student borrowers affected by a national emergency.”

During the COVID-19 pandemic, the Trump and Biden administrations have used the HEROES Act to suspend student loan payments.

Citing the HEROES Act as the legal footing for the student loan forgiveness plan, Education under secretary James Kvaal referenced economic conditions, including inflation, and surveys of borrowers that he said showed “the harmful effects of the pandemic may make repayment more difficult for student loan borrowers than it was before the pandemic, especially for lower income borrowers,” he wrote in an Aug. 24 memo.

Forgiving up to $20,000 in federal student loans for eligible Americans—individuals earning less than $125,000 and $250,000 for married couples—would cancel the remaining balances for about 20 million borrowers, according to White House data. Nearly 90 percent of the debt relief will go to those earning less than $75,000 a year.

“The secretary responded to the devastating economic consequences of the COVID-19 pandemic by granting targeted relief to borrowers at higher risk of delinquency and default due to the pandemic—specifically, by waiving and modifying certain provisions governing student-loan cancellation and discharge,” the administration’s brief says. “That relief falls squarely within the secretary’s express statutory authority.”

‘Broad, Aggressive Reading’

The justices will only weigh in on the merits of the plaintiffs’ arguments if they first determine that the plaintiffs have standing, or the right to sue, and legal experts are skeptical that the plaintiffs can clear that threshold. But if they do, those same experts don’t think the administration will win its argument with conservative justices in the majority.

“I’m highly skeptical that this 20-year-old law that they’re dusting off allows them to cancel $400 billion in debt for roughly 40 million borrowers,” said Jack Fitzhenry, senior legal policy analyst at the conservative think tank the Heritage Foundation.

Fitzhenry said the act’s restrictions on when its authority can be invoked and who can benefit are “nontrivial restrictions.”

In the lawsuits’ path to the Supreme Court, only one judge—U.S. District Judge Mark Pittman—has ruled specifically on the merits. Pittman, who ruled the debt-relief plan unconstitutional, wrote that the HEROES Act didn’t mention loan forgiveness specifically and didn’t provide clear congressional authorization.

Christopher Walker, a law professor at the University of Michigan, said using HEROES to cancel student loans is “a pretty big leap.”

“It’s a really broad, aggressive reading of a statute that was meant to help during war and postpone payments on loans for the military or maybe for some national emergencies,” he said. “Does the text of the statute maybe allow it? Probably. But is that really what Congress was thinking when they created this program for military and national emergency relief? That’s part of what the courts will decide.”

‘Unsurprising Compromise’

Using the HEROES Act to cancel student loans was not the recommendation of Dalié Jiménez, a law professor at the University of California, Irvine, and director of the Student Loan Law Initiative. She and other legal experts urged the Biden administration to use the Higher Education Act of 1965 as the legal justification for the debt-relief plan. That law gives the secretary the authority to “compromise, waive, or release” the department’s claims against borrowers.

Jiménez said the HEROES Act was “an unsurprising compromise,” and that using the HEA would’ve been like opening Pandora’s box, in that the HEA can provide a broader authority for debt cancellation.

Instead, she said that the HEROES Act provides the administration with a narrower authority.

“It didn’t matter what [Biden] did,” she said. “There was clearly going to be a lawsuit or more about this. It didn’t matter … Time will tell if it was the right thing. I could definitely see the arguments for why this is the better way, to start with something narrower that accomplishes politically and internally what they decided to do.”

Jiménez was part of a group of law professors who recently filed an amicus brief in support of the administration. Among other points in the brief, the professors argued the HEROES Act “is as clear as sunlight” in authorizing the department’s action to forgive some federal student loans.

“Respondents’ insistence that any relief be limited to those who suffered direct hardship as a result of the COVID-19 national emergency would transform Congress’s ‘or’ into an ‘and,’” the law professors wrote in the brief. “Congress could have limited the secretary’s waiver authority in disaster areas only to those directly affected, but it chose not to, and this choice ‘requires respect, not disregard.’