Biden's student loan bailout died in the courts, but taxpayers could still be forced to pay the tab

President Joe Biden’s illegal and hastily-constructed student debt bailout worked well for Democrats in the voting booth but terribly for them in the courts. Days after Democrats outperformed expectations in the midterms, two federal courts issued orders halting the U.S. Department of Education’s student loan cancellation program.

Now, the administration has asked the Supreme Court to weigh in, but it is not waiting to hear from the judicial branch before forcing taxpayers to pick up even more of the tab. Rather than letting the legal process unfold, or trying to pass a bill through Congress, Biden used the one arrow left in his quiver: He extended the student loan moratorium yet again.

Repayments will begin only after 60 days past the end of litigation, or 60 days past June 30, 2023, whichever comes sooner. Biden extended the freeze because he sees the writing on the wall: The bailout was illegal from the start and thus doomed in the courts. The 60-day time frame between the end of litigation and the restart of repayment is a ploy for time. It gives the White House two months to figure out some other way to bail out borrowers at the expense of everyone else. 

The two-month buffer also provides the White House a convenient scapegoat: Should the Court take its time deciding the program’s fate, Biden and Secretary Miguel Cardona can blame it for continuing the freeze. They will expect the public to either forget or ignore that it was their idea to tie the freeze to the Supreme Court in the first place.

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This perpetual loan holiday is loan cancellation by another name, and it comes with a hefty price tag, costing the taxpayers $102 billion and counting. The moratorium is based on a national pandemic emergency, which the president himself admits is now over. There is no reason to keep the freeze in place, but that is not stopping the Biden administration from trying to create one. 

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In a court filing asking the Supreme Court to vacate the injunction issued by the U.S. Court of Appeals for the Eighth Circuit, Undersecretary of Education James Kvaal argues that the promise of the student loan bailout is sufficient reason to delay the return to repayment. He writes:

These student loan borrowers had the reasonable expectation and belief that they would not have to make additional payments on their federal student loans.

Never mind that it was the Department of Education that gave them that belief by promising loan forgiveness it could not legally deliver. Kvaal laid the pretext for keeping the pause in place: The mere promise of mass loan forgiveness, legal or not, precludes the Department from restarting repayments. 

He cites "confusion" over repayment as reason to allow the debt forgiveness program to move forward. The Biden administration caused that confusion by creating an illegal program and is actively making it worse by continually sending approval letters to loan forgiveness applicants, even though the program has been halted by the courts. The administration wants the confusion, because it is the only justification it can muster to keep student loans on hold for the foreseeable future. 

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When the president announced the mass loan forgiveness program, he also announced that mandatory student loan repayments would restart on January 1. But now that the White House’s mass loan cancellation is under threat, the president is perfectly happy to keep his thumb on the loan payment pause button for as long as he needs to figure out a backup plan for nationalizing the loans.

Keeping student loans paused is not without cost. No matter what the courts decide, the outcome will be the same: Hardworking taxpayers will continue to foot the ever-increasing bill.

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