Which provision of the law allows the President to discharge student debt?

Question

President Biden recently announced that student debt will be forgiven for some groups of Americans but I couldn't figure out which provision of the law allows Biden to do this without a bill passed by Congress?

Answer 1

The most prominent argument that has been advanced surrounding this proposed action can be summarized as follows: There was a bill passed by Congress, in 1965, that authorizes the Secretary of Education to take this action.

This theory holds that the executive branch was granted the authority to cancel federal student loan debt as part of the Higher Education Act, duly passed by Congress in 1965 (and encoded as USC 20 §1001 et seq.) Specifically, §1087hh states that:

In carrying out the provisions of this part, the Secretary is authorized—

1. to consent to modification, with respect to rate of interest, time of payment of any installment of principal and interest or any portion thereof, or any other provision of any note evidencing a loan which has been made under this part;
2. to enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption; ...

Further background on the legal theory under which this authorizes debt cancellation can be found in this memo from the Project on Predatory Student Lending, sent to Sen. Elizabeth Warren during her 2020 presidential campaign. They concluded that via this language,

Congress has granted the Secretary [of Education] a more specific and unrestricted authority to create and to cancel or modify debt owed under federal student loan programs in the Higher Education Act (HEA) itself. That provision empowers the Secretary to execute the broad debt cancellation plan you have proposed.

It should be noted that this argument is not universally accepted. It should also be noted that it is questionable whether anyone could have standing to challenge this action, so whether or not it is allowable may not be testable in court. And finally, it is not yet clear (at least not to me) what the details of this particular executive action are; I'm not even sure they have been released. It could be that they're based on an entirely different legal theory.

Answer 2

The president can't do anything related to money unless a bill is passed by Congress. Here is one bill that was already passed by Congress (20 USC 1082(a)(6)), which bears a relationship to student loans. There are other bills passed by Congress, such as Higher Education Relief Opportunities for Students act 2003. When the order is eventually made available, we may be able to comment on the proposed application of the law.