Another Lawsuit Imperils Biden’s Student-Loan Schemes

Earlier this week, SoFi, a private student-loan-refinancing company, unexpectedly filed suit against the Biden administration, arguing that its ongoing pause on student-loan repayment is unlawful. This comes on the heels of the Supreme Court’s hearing arguments in two cases challenging the legality of the administration’s plan to cancel student debt altogether. While the White House is keen on moving forward its agenda on student-loan relief, absent support in Congress for legislative action, even within the Democratic Party, it will be stuck making changes using dubious legal authority that will result in a stream of legal challenges that may thwart its efforts.

Congress put repayment of federal student loans on pause at the onset of the pandemic — authorizing a temporary freeze on the collection of federal student loans with the Coronavirus Aid, Relief, and Economic Security (CARES) Act. CARES halted interest accumulation and allowed borrowers to take a break from monthly payments without penalty. The move made some sense at the time, given the highly uncertain economic environment and concerns over the robustness of the existing safety nets for borrowers.

About the Author

Beth Akers

Beth Akers is a senior fellow at the American Enterprise Institute.

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Earlier this week, SoFi, a private student-loan-refinancing company, unexpectedly filed suit against the Biden administration, arguing that its ongoing pause on student-loan repayment is unlawful. This comes on the heels of the Supreme Court’s hearing arguments in two cases challenging the legality of the administration’s plan to cancel student debt altogether. While the White House is keen on moving forward its agenda on student-loan relief, absent support in Congress for legislative action, even within the Democratic Party, it will be stuck making changes using dubious legal authority that will result in a stream of legal challenges that may thwart its efforts.

Congress put repayment of federal student loans on pause at the onset of the pandemic — authorizing a temporary freeze on the collection of federal student loans with the Coronavirus Aid, Relief, and Economic Security (CARES) Act. CARES halted interest accumulation and allowed borrowers to take a break from monthly payments without penalty. The move made some sense at the time, given the highly uncertain economic environment and concerns over the robustness of the existing safety nets for borrowers.