When faced with the daunting task of designing an effective structure for the U.S. government, the founders of this nation envisioned having a legislature to produce laws, a separate executive branch to implement those laws, and an independent judiciary to resolve any differences between them. For the most part, the arrangement functions reasonably well, but not always. An example is when the legislature is unable to reach agreement on a bill that is desired by the chief executive who occupies the White House. Whenever that situation arises, the result can best be described by President Obama who stated, “I've got a pen, and I've got a phone," thereby making it possible to issue executive orders to bypass congressional deadlock.
It is an effective mechanism, but depending on the nature of that order and how contentious it is, the ruling may not have a long shelf life. For example, once a new president is elected from a different political party, that individual’s first actions might include rescinding a predecessor’s executive orders. A second remedy also is available by having a preliminary injunction granted, which occurred on November 14, 2022 by a three-judge panel of the Eighth U.S. Circuit Court of Appeals. That judicial decision blocks the Biden administration’s plan to cancel some student debt. According to U.S. Secretary of Education Miguel Cardona, as of mid-November 2022, more than 26 million borrowers have provided the information needed to process their applications for relief and 16 million applications have been approved and sent to loan servicers to be discharged when allowed by the courts.
Time will tell whether students will reap the benefit of efforts to improve their financial situation. Focusing on the possibility that debt relief subsequently will go into effect, the U.S. Department of Education on October 31, 2022 released final regulations that streamline and improve the rules for major targeted debt relief programs. The regulations expand eligibility, remove barriers to relief, and encourage automatic discharges for borrowers who are eligible for loan relief because their school closed; they have a total and permanent disability; or their loan was falsely certified. The rules also establish a fairer process for borrowers to raise a defense to repayment, while preserving borrowers’ day in court by preventing institutions of higher education from forcing students to sign away their legal rights using mandatory arbitration agreements and class action waivers. Finally, the rules help borrowers avoid spiraling student loan balances by eliminating all instances of interest capitalization not required by statute, which occur when unpaid interest is added to a borrower’s principal balance, increasing the total amount that may have to be paid.
U.S. Supreme Court And College Admissions
The Supreme Court on August 31, 2022 heard several hours of oral arguments in two cases against Harvard University and the University of North Carolina that were brought by Students for Fair Admissions (SFFA) seeking to overturn four decades of precedent allowing the consideration of race in college admissions. Specifically, this group is petitioning justices to overturn a ruling in the case Grutter v. Bollinger, a decision in 2003 that enabled institutions of higher education to use race as part of a holistic review of admissions applications when narrowly tailored. The Court is expected to announce its decision in 2023, perhaps by early June.
Reauthorization Of The Higher Education Act (HEA)
The Higher Education Act of 1965 (P.L. 89-329, as amended), authorizes a broad array of federal student aid programs that assist students and their families with financing the cost of a postsecondary education, as well as programs that provide federal support to postsecondary institutions of higher education (IHEs). The Department of Education administers the programs authorized by the HEA. The most prominent components are the Title IV programs that provide financial assistance to students and their families. The HEA was first enacted in 1965 and has since been amended and extended numerous times. It has been comprehensively reauthorized eight times. The most recent comprehensive reauthorization occurred in 2008 for a five-year period. Whether it will be reauthorized in 2023 is uncertain. This newsletter will keep readers apprised of any developments that unfold.