The Constitution says that money bills (taxing and spending) originate in the House of Representatives.  They go to the Senate for approval, then on to the President for signature into law.  Arguably, President Joe Biden’s use of emergency powers[1] to cancel $300-$500 billion worth of student debt short-circuits this process.  The Executive branch will borrow the money to cover the cost without any input by the Legislative branch. 

            The Fifth Amendment says that “No person shall be… deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”  Arguably, debt cancellation “takes” from banks and loan processing companies the fees that they would otherwise have collected. 

            So, there may be law-suits that delay implementation of the cancellation.[2]  Or perhaps not.  Apparently, the financial services industry is still trying to figure out what to do.  JMO, but bad press isn’t likely to deter them.  However, they might decide that the legal fees outweigh what would they would get from suing.  They might just accept repayment of the principal from the government and move on down the road to the next money harvest.[3] 

            For the moment, the House of Representatives isn’t likely to defend its constitutional rights against what could be called a usurpation by the Executive branch.  House Speaker Nancy Pelosi is famously proud of her skill at counting votes and there is a tight election approaching.  If that election does tip toward a Republican majority, then the House could sue.  “If.”[4]   

            Republican state attorneys general could sue the Biden administration, just to gum up the works on another of his signature initiatives.  This sort of thing is becoming more common, despite the dubious legal grounds for some of the suits.[5] 

Awkwardly for Democrats, among the precedents offered to justify President Biden’s action include President Donald Trump’s transfer of Department of Defense funds to pay for his border wall.  Less awkwardly, nobody squawked when the Biden administration suspended student debt repayment in 2020.  Still, the cancellation is a much bigger step.[6] 

The cancellation targets specific borrowers, rather than being an across-the-board write down.  Borrowers seeking relief will have to apply.  President Biden announced the debt cancellation before the Department of Education had worked out the details of the plan.[7]  The application form will become available in October; the deadline for submitting it will be 31 December 2022, after which student loans payments must begin.  Lots of bureaucratic snags could occur (but may not).  Law suits could put the whole effort on pause.  Someone is going to bear the blame in the public eye if things go wrong.  If.    

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[1] For an emergency that is, in many minds, now over.  See: the charts in David Leonhardt, “On the Left, Feeling Less Anxiety About Covid,” NYT, 1 September 2022. 

[2] Alan Rappeport, “Court Challenges to Biden’s Student Loan Plan Are Likely,” NYT, 2 September, 2022. 

[3] Harry McClintock – The Big Rock Candy Mountains – (1928). – YouTube 

[4] Philip of Macedon to the Spartans: “You are advised to submit without delay, for if I bring my army on your land, I will destroy your farms, slay your people and raze your city.”  Spartans to Philip of Macedon: “If.” 

[5] See: Erik Ortiz, State attorneys general have sued Trump’s administration 138 times — nearly double those of Obama and Bush (nbcnews.com)

[6] In particular, it establishes a “moral hazard” that future borrowers will expect their own jail delivery. 

[7] See a good overview at What You Need to Know About Student Debt Cancellation – The Education Trust (edtrust.org)