Litigation Update: Garrison v. U.S. Dept. of Ed.: A Challenge to Biden’s Student Loan Forgiveness

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In August 2022, the Biden administration announced plans to cancel up to $20,000 in student loan debt per person for more than 40 million Americans. To do this, the Department of Education relies on the HEROES Act which, as an aid to veterans and their families, allows the government to modify student loans during times of war or national emergency.  On September 27, 2022, the Pacific Legal Foundation, on behalf of Frank Garrison, filed suit against the U.S. Department of Education to block the Department’s move to cancel more than $500 billion in student loan debt. Plaintiff seeks a temporary restraining order from the U.S. District Court for the Southern District of Indiana to prevent the loan cancellation from going into effect. Mr. Garrison, as a part of an existing, congressionally authorized Public Service Loan Forgiveness (PSLF) program, will receive debt forgiveness after making 10 years of payments on his loans. The challenged program, however, will, as a result of cancelling his loans, stick him with a new state tax bill which he would not have under his existing PSLF program. Indiana is one of seven states that plans to tax any debt forgiven in Biden's plan, and thus Garrison would owe more than $1,000 in state and local taxes. 

This Litigation Update from Caleb Kruckenberg will provide a current look at Garrison v. U.S. Department of Education.


  • Caleb Kruckenberg, Litigation Counsel, Pacific Legal Foundation 
  • [Moderator] Diana Furchtgott-Roth, Director, Center for Energy, Climate, and Environment and The Herbert and Joyce Morgan Fellow in Energy and Environmental Policy, The Heritiage Foundation


As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.

Event Transcript



Chayila Kleist:  Hello, and welcome to The Federalist Society's webinar call. Today, November 4th, 2022, we present a litigation update on Garrison v. U.S. Department of Ed.  A challenge to Biden's student loan forgiveness. My name is Chayila Kleist, and I'm an assistant director of practice groups here at The Federalist Society. As always, please note that all expressions of opinion are those of the experts on today's call as The Federalist Society takes no position on any particular legal or public policy issues.


In the interest of time, we'll keep our introductions brief, but if you'd like to know more about each of our speakers, they have a full bio on Today, we are fortunate to have with us Caleb Kruckenberg, litigation counsel at the Pacific Legal Foundation and a litigating attorney in this case. And as our moderator, Diana Furchtgott-Roth, the director for the Center of Energy, Climate, and Environment and The Herbert and Joyce Morgan Fellow in Energy and Environmental Policy at The Heritage Foundation.


Throughout the panel, if you have any questions, please submit them through the question and answer feature so that our speakers will have access to them when we get to that portion of the webinar. With that, thank you for being with us today. Miss Furchtgott-Roth, the floor is yours.


Caleb Kruckenberg:  Diana, unfortunately, I think you are muted at least on my end.


Diana Furchtgott-Roth:  Okay. All right. Is this better?


Caleb Kruckenberg:  Yes.


Diana Furchtgott-Roth:  Okay. All right. Well, thank you so much Paxton, my assistant in here. So let's start over. It was really extraordinary on August 24th that President Biden decided to write off $10,000 of each student's debt using a little known 2003 statute that was meant for active duty soldiers. This added up to $400 billion which was 1.6 percent of GDP and it had major economic consequences.


Debt forgiveness and delays in loan repayments are inflationary. So it added to inflation. Plus the delays in the loan repayments which were also added are highly regressive in their impact. They affect low-income individuals much more than high income individuals. And the savings are going to be highest for those who have the highest expected earnings. In other words, the average savings are going to be $90,000 for individuals with medical degrees and $55,000 for those with law degrees while those with bachelor's degrees will save $8,500 and those with associate's degrees will save $6,000. The unemployment rate for people with a BA -- and new data just came out today, November 4th -- is 1.9 percent. So this is not a group that needs help. Debt cancellation and interest rate forgiveness will perpetuate the extraordinarily high inflation rate for college educations.

But what's important about this is not these economic effects but the legal question. And we're so fortunate to have Caleb Kruckenberg here to be able to discuss it. He's an attorney at the Pacific Legal Foundation where he litigates separation of powers issues across the country. Caleb is a former prosecutor, criminal defense attorney, and lobbyist for a national advocacy magazine and organization. As a litigator fighting the administrative state, Caleb has litigated some of the most consequential issues involving the separation of powers. He even convinced Tenth Circuit Judge Timothy Tymkovich to describe Chevron deference as "The Lord Voldemort of administrative law." He is the lead attorney in the Pacific Legal Foundation's challenge to the U.S. Department of Education's loan cancellation policy. Well, Caleb, now that I've talked a bit about the economic consequences of this which are very negative and very harmful to the economy as well as to the moral incentives of people willing to take out student loans in the future, can you tell us what is the student loan cancellation policy?


Caleb Kruckenberg:  Well, this is something that the president had been teasing since the campaign trail, but the final policy -- and I use that term lightly because as we'll discuss, it's hard to pin down exactly what the final policy is, but the basic criteria are anyone with federal student loan debt will receive $10,000 of cancellation of their loan balance or if they received a Pell Grant, $20,000 in cancellation as long as their household income for either 2021 or 2020 was less than $250,000. Otherwise, that's it. And the administration has bragged essentially that there are about 40 million borrowers that they think are eligible for their program and as you said, the congressional budget office estimates this will be about $400 billion at a minimum. Some estimates go as high as about $600 billion in just immediate cancellation costs.


Diana Furchtgott-Roth:  It's really extraordinary, Caleb. So someone who's just graduating from Harvard Law School who has zero income is going to qualify for this write off?


Caleb Kruckenberg:  Absolutely. And it's a situation where, because we're looking at one of two years, someone could make $249,000 in 2020 and maybe make a million dollars this year. They'd still qualify for this cancellation. And as you noted, one of the criteria is you have to have student loan debt. So automatically, it only applies if you went to college, and you took out loans.


Diana Furchtgott-Roth:  Caleb, what's the legal justification for this policy? How can the president just add $400 billion to the national debt and to this year's deficit without any congressional approval?


Caleb Kruckenberg:  Well, as a lot of us have seen over the last few years, there has been a real tendency to waive your hands in the air and say "Covid," and that's how I'm doing it. But the legal justification actually was released the same day that this policy was officially announced. It's a memo from the office of legal counsel relying on something called the HEROES Act. This is a statute that was passed in 2003 to give direct targeted relief to returning service members for the Iraq war. That was the stated purpose of the statute.


And the relevant provision that we're discussing here says that the secretary of education in times of war or national emergency can waive or modify student loan requirements as long as they are necessary to ensure that certain individuals, because of the war, because of natural disaster, have suffered a "direct hardship" from the disaster. So that's kind of a snarl of statutory language, but basically, it's a limited targeted provision that says, "If we have certain very clearly identifiable classes of people who are suffering a concrete harm because of a war, like returning service members, we can waive certain loan requirements." And the president has basically said, "Well, Covid is a natural disaster or national emergency. It's been declared that. Therefore, I can do whatever I want, the secretary of education can do whatever they want because some people were harmed economically during the pandemic."


Diana Furchtgott-Roth:  Right. Even though the president has declared that Covid is over --


Caleb Kruckenberg:  Right.


Diana Furchtgott-Roth:  -- technically the emergency is still in place. Well, it seems to me that the hardship is more among those who do not have a college education rather than those who have not had the benefit of a college education. Well, Caleb, there was a major decision, the Supreme Court decision in West Virginia v. EPA and its discussion of the major questions doctrine that just came out at the end of the last season. Does this affect the case?


Caleb Kruckenberg:  Absolutely. I think for a lot of us who have been really following questions of administrative law and the separation of powers, the West Virginia v. EPA case really solidified the Supreme Court's view that they're very skeptical when administrative agencies are taking action that seems really radical. And a lot of the things that the Court talked about in that decision really resonate with this instance. So one of the things that I think the Court was very concerned about in that case was what they referred to as discovering new powers in an old statute. So if you have a law on the books that nobody ever thought could do what they're doing now, that's a big red flag and it's also a red flag if this is a major issue, economically or politically significant, if it has long range consequences. And really what the Court said is "We have to think about what Congress meant when they passed the relevant law and did they really intend for an agency to do this kind of thing?" If we think about student loans, that's exactly on point. The student loans statute that we talked about, the HEROES Act, that had a very specific purpose, and I do not believe anyone thinks that Congress in 2003 expected the president to be able to say "I'm just going to cancel student loan balances. I'm going to order the secretary of education to do this," and do it informally not even go through normal notice and comment particularly when we're talking about something that's going to cost a staggering amount of money.


Diana Furchtgott-Roth:  Exactly. Yes. And I want to say to all of you listening, I want to thank you for coming, and if you have questions, you should put them in the chat. At around 2:30, we're going to get to the questions in the chat. So feel free to put them in now. Caleb, I wanted to ask you, why is the Pacific Legal Foundation concerned about loan cancellation? Shouldn't we want to help struggling people? What if we had crafted this -- what if President Biden had crafted this to leave out these graduates of Harvard and Stanford and Yale and just focused on low-income individuals? Do you think that this would have been better? Do you think it would have been permitted?


Caleb Kruckenberg:  Well, ultimately, I think what I care about, what Pacific Legal Foundation cares about is the separation of powers and following the appropriate avenues for doing these sorts of things. It's one thing if Congress wants to say, "We have a student loan forgiveness program." I mean, that's something they have done with public service loan forgiveness programs, things like that. But it is a whole other story when the administrative entity, the Department of Education at the president's insistence is saying, "We are going to craft this very consequential policy all on our own with no accountability." Because it's really important to remember that Congress considered this very policy. This was a campaign issue and the president has -- the democrats have the white house and both chambers and there were lots of proposals to try to get this through. They didn't pass and the reason is representatives knew that their constituents would not approve of it. They wouldn't vote for them. That's the way it's supposed to work, and the president doesn't just get to say, "I disagree with the democratic process. I don't like that outcome. I'm going to do it anyway." And as we've seen, the policy itself is very regressive. It's a disastrous policy at record inflation as you said and so this is really just a perfect storm.


Diana Furchtgott-Roth:  It really is, Caleb. And I wish that as a taxpayer, I would have standing to sue but I don't have standing to sue. Why did you sue on behalf of one of Pacific Legal Foundation's own attorneys in Indiana?


Caleb Kruckenberg:  I think everyone has recognized one of the major problems with challenging this policy, and a lot of our friends in this space have really been trying to figure out who can challenge it because as you said, just because we pay taxes, and we don't like what the government is doing, the courts have said, "That's not good enough." We have to actually be harmed by this specific policy and when it's a policy that is giving money to people, it's hard to say that that harms you. One thing we realized though, the more we thought about this, the more we dug into the issue, is I actually had a colleague that was going to be harmed by this policy. There are six states at least that will tax loan cancellation as income. Now, federally the loan forgiveness is not taxed as income, but these states do. And because of the way his loans were set up, we realized that he would get a one-time tax penalty from the state of Indiana where he lives but he wouldn't get any benefit from the cancellation policy because ultimately, he hopes to have his loans forgiven under a congressional statute under the public service loan forgiveness. So it was really an opportunity and I think we were able to show that someone is actually concretely harmed by this.


Diana Furchtgott-Roth:  Right. So if someone was concretely harmed by it, could you explain why your case was dismissed by the district court for lack of standing?


Caleb Kruckenberg:  Right. And I think the district court's opinion was interesting in some ways because it's not the argument we expected, but I think we've been very clear we think it was wrong and we think it was misguided.  Ultimately, the court said that the injury was from the state of Indiana, was from local taxes. It's not from the federal policy. I think the Supreme Court has been very clear and it's been very clear recently that you can have an injury for standing purposes from a third party. It just has to be predictable. And I think the district court's decision will ultimately be reversed. The question is, what can we do in the meantime because this policy is looming and the president just said yesterday that he expects it's going to take effect in the next two weeks.


Diana Furchtgott-Roth:  Well, you requested an injunction from the Seventh Circuit which was also denied, and why was that? And where do things stand today?


Caleb Kruckenberg:  Well, so what was interesting is, we initially sought an injunction with the district court just on our one client, Mr. Garrison. And in response, the Department of Education changed their policy, changed loan forgiveness on the fly. I think what is really remarkable, they filed a notice with the court saying, "Well, we've specifically excluded your client from this policy, so his case is moot." We omitted our complaint. We added an additional client. We added a class of plaintiffs. And the policy -- the loan forgiveness program has still evolved in response to this and other litigation. I think the Seventh Circuit unfortunately bought that argument, bought that idea from the government and they said, "We're not going to give you an injunction because the government has created a mechanism where people with state tax liability can opt out if they want to. Therefore, you're not harmed." And the real problem with the Seventh Circuit's reasoning is they're looking at the things as they stand today. That is not a question of standing. That is not the proper analysis and I think it's very clear in the court's precedence that these kind of games where the government is trying to avoid a review on the merits will not be rewarded or they should not be rewarded.


Diana Furchtgott-Roth:  Well, some people say that you announced your lawsuit too soon enabling the administration to modify the program thereby dealing with your objection. Do you think that's true? Do you think you should've waited a little bit longer? How would that have worked out?


Caleb Kruckenberg:  Well, the problem with this cancellation policy all along has been in part the informality and the speed with which the Department of Education has acted. So just to set the picture here, President Biden announced it in a press release on August 24th. The Department of Education, sometime in September, set up an FAQ section on their website and as we've learned in the course of this litigation, that's it. That is the formal policy is just their website which they've been updating throughout litigation.


They also promised to set this in motion in early October and one of the things they said is they're going to automatically apply forgiveness to up to eight million people and that included our clients who faced state tax liability. If we waited, then it's very difficult to unring that bell because the real problem is, the money is going to go out. That's it. So if we sit back and we wait until after all of this happens, there's almost nothing we can do to challenge it. We don't have standing then because there's no redressability. You can't get damages. So our only option in our view was to move immediately, file suit, and then we unfortunately have been dealing with the government playing games, changing it on the fly.


Diana Furchtgott-Roth:  How do you think the Supreme Court will act? Haven't they denied an injunction in similar cases? Do you think they're going to deny an injunction now?


Caleb Kruckenberg:  The Seventh Circuit denied an injunction in our case last Friday and we filed a request with the Supreme Court for an injunction pending appeal earlier this week. That is still pending. And you're right that the Supreme Court has denied similar requests before. Those cases though raised taxpayer standing and I think that is -- while I supported them in spirit, ultimately that's not going to get there because I don't think the Court is going to overturn their precedents on taxpayer standing. I think that's a very clear question in the Court's mind. This is a much different issue and I think when we have a class of people who are actually harmed by this policy, they should be able to challenge it. And I think also on the merits this is such a clear issue. I mean, nobody is really seriously arguing "Oh, yeah. The HEROES Act for sure -- that allows the president to do this." And so we're very hopeful. I mean, we haven't heard anything from the Court which in my view is good news. We're hoping that the Court will issue an injunction. And like we said, our only goal here is to litigate it on the merits and really force the administration to justify it under their statutory argument.


Diana Furchtgott-Roth:  Well, it's clear why there's a rush to get the injunction before the money goes out. So can you tell us what is your broader goal with this litigation?


Caleb Kruckenberg:  Well, there's no question that this is a major separation of powers issue and I think we can all go back, and no matter how this shakes out, we can all probably agree -- at least most of the people I talk to and I certainly believe this is completely illegal. This is wrong. I don't care if you support the goal or not. It's illegal. It doesn't follow any sort of normal process and I think it is really designed as a cynical ploy to issue a policy just before an election, ram it through, and try desperately to avoid review in the courts. That is a real danger. That kind of activity is such a danger to the separation of powers. It goes against everything that is supposed to happen. And so I think it is vital that we all stand up, we all try to stop this, and I'm optimistic that the Court is going to say, "Absolutely not. You can't get away with this kind of behavior. And it doesn't matter what your motives are."


Diana Furchtgott-Roth:  It's very much like Tammany Hall issuing payments for people to vote in advance -- very, very political.


Caleb Kruckenberg:  It absolutely is, and I think the president has been very transparent about it. When he announced the policy on August 24th, he referred to it as completing a campaign promise. And they talked about wanting to get this into effect in October no matter what. We all know why, and the idea that they're going out, they're campaigning on this, I mean, in a lot of ways it's abhorrent behavior but it's also lawless behavior. And it's something that absolutely needs to be shut down.


Diana Furchtgott-Roth:  Let me just ask you one more question before we turn it over to audience questions, and I want to say if you have questions, please put them in the chat and then we will get to them after Caleb answers this one last question from me. Can you say something about other groups that would be harmed that perhaps haven't sued or who are preparing other suits? For example, there's groups of student loan associations. The student loan alliance which is apparently would be harmed but has not chosen to sue. Then there's groups of attorney generals. There's a group of attorney generals representing different states because in certain states, there would be a loss from this particular action. Could you talk about some of their efforts before we move on to audience questions?


Caleb Kruckenberg:  Right. So I think the most important case out there right now beyond my own obviously, is the challenge by the attorneys general. That is pending in the Eighth Circuit still and the Eighth Circuit has issued an administrative stay while they consider a request for an injunction. That could dissolve at any moment. We don't know. But that's certainly a good sign. That is a strong challenge that the states have argued, I think very convincingly, that they have a right to challenge this policy because it harms them economically. And frankly, I wish them a hundred percent luck. Our goal here is to stop it however we can.


And I think part of what motivated us to move as quickly as we did to file when we did is because we were concerned that some of the groups that were the best position to challenge it wouldn't for a variety of practical reasons. If I'm thinking about the people who are really harmed here, I'm thinking about loan servicers, I'm thinking about certain entities like that. They have a lot of good reasons why they wouldn't necessarily want to get involved. And here's my cat so everyone can see. The servicers I think have a legitimate concern and that they don't want to sue the Department of Education. They don't want to sue their regulator. They don't want to pick that fight. I understand it but I hope --


Diana Furchtgott-Roth:  Although, it's pretty scary, Caleb, that you're afraid of your regulator and that you can't sue because you're afraid of your regulator. That really speaks volumes.


Caleb Kruckenberg:  I agree and honestly, especially based on my criminal defense background, I don't know that that is an unreasonable fear for some of these entities.


Diana Furchtgott-Roth:  Yeah.


Caleb Kruckenberg:  But I hope that if it's not my lawsuit, it's not the state's lawsuit, this litigation will empower others to continue fighting this. There are other theories of standing. I hope someone is successful because this has to stop no matter how we get there.


Diana Furchtgott-Roth:  Right. Right. Well, Paxton, if you could pass me some of the questions. And I'd like to recommend this paper that two of my colleagues wrote called "Student Loans, Major Questions, and the Dean Wormer Theory of Administrative Law" by Jack Fitzhenry and GianCarlo Canaparo from the Heritage Foundation. And we're going to put the link in the chat. It's also on SSRN and it's very humorous, referring to Animal House and the brothers of the Delta Tau Chi fraternity. So I recommend it to all of you. Well, we have our one question here. "Are you arguing at all from the express exclusion of the dischargeability of student loans under Title Two as a congressional enactment?


Caleb Kruckenberg:  So we haven't made that argument, and I've seen that argument --


Diana Furchtgott-Roth:  You see this is a chance for you to get all kinds of good arguments now.


Caleb Kruckenberg:  Absolutely. And I think that is an interesting point. And I think it goes into one argument that we've made that I didn't talk about which is about -- there's a nondelegation problem in the sense of, if we consider the HEROES Act to really do what the president is saying then that looks a lot like a line-item veto. That looks a lot like the secretary of education basically getting to say, "I can void any statute in the whole entire United States code that I don't like, that I don't agree with," because that's the interpretation they've taken under the HEROES Act. They're saying essentially any student loan statute no matter what can be waived or that we can use this waiver authority to stop it. And so their position I know is that this includes anything. This includes any appropriations issue, anything in any of the titles, this allows us to do everything we want to.


Diana Furchtgott-Roth:  Here's a second question from the same person, Jeffrey Wood -- you should really be paying him for his input. "Does the policy include any provision modifying federal income tax treatment for these discharged and if so, did that go through appropriate notice and comment at treasury? Normally, such discharges will result in cancellation of indebtedness income including those associated from these kinds of things."


Caleb Kruckenberg:  So one thing that we saw from Congress is, during the pandemic, Congress passed a statute saying that any federal student loan cancellation or forgiveness under any program will not be taxed as student loan income until 2025 and there's certain exceptions. But essentially, what the statute suggests and what I think is probably the correct interpretation is that this kind of cancellation does not have federal income tax consequences because it is occurring before 2025. The states however take a very different view, and for instance, if we're looking at Indiana's treatment of this, basically what they said -- they passed a statute saying "Existing congressional programs like public service loan forgiveness -- fine. We won't tax that as income. Anything else, any future programs, we will." That would include this. And so I think in a lot of ways we all saw this coming. I think a lot of states saw this coming and for a variety of policy reasons, I think the states said, "No. We're going to consider this income."


Diana Furchtgott-Roth:  And I just wanted to say just in case viewers don't know, there are a variety of these public service loan forgiveness programs. There's one if you work for a nonprofit for 10 years and you pay a certain amount of your income -- about 10 percent every year. After that 10-year period, the rest is wiped off. There's also programs for nurses. There's programs for doctors. There's programs for a very wide variety of individuals to have their loans wiped off if they pay a small amount every year -- 10 or 20 percent of their income -- and they work in this particular capacity. We're taking a question from David Tryon. "How many other lawsuits are pending and are there any other injunctions in place? You've mentioned the state attorneys general. Are there any others besides that?"


Caleb Kruckenberg:  There are a number of lawsuits. There are a few that I'm aware of. I believe there's one in Texas that is -- they're litigating very rapidly in the district court. There are others and I think other organizations have raised a variety of theories about standing. I've seen some that have argued about the lack of notice and comment which I think is a very real concern here and I think some of those theories are premised on the fact that we didn't have a part in this conversation. We should have. There are others that I believe are raising theories. I think the CATO Institute has a lawsuit. They're raising a theory about how this might discourage people from working for them or working for nonprofits because they -- it in a lot of ways undermines the public service loan forgiveness program. The one you mentioned which is an established route that Congress set up. And when you just change the rules midstream, that can undermine those policies.


I don't know of any injunctions. I think the only one I'm aware of is from the Eighth Circuit and so that I think is why it is so imperative that the Supreme Court rules very soon and gives us the ultimate ruling saying this entire policy is enjoined moving forward because they're not waiting. The president gave a speech yesterday in New Mexico. He said that he thinks he's going to win the case. He's going to win all of these cases and "we're full speed ahead" I think is a direct quote. He said checks will go out in the next week or two. So this is something that is happening all around us and I think is really crying out for court intervention.


Diana Furchtgott-Roth:  But if the checks are sent out before an injunction, could they be clawed back? This is my question, not an audience question. Could they be clawed back? Could people be required to repay?


Caleb Kruckenberg:  That raises an extremely complex question and to be honest, I don't know the answer and I don't know that the courts know the answer. I think we have to assume that you can't or that that's going to raise other due process problems for the borrowers. I don't know and I think there's a real fear that this is just going to happen and if the courts let it, that's kind of the end of it. They've gotten away with it. And we're all going to face the consequences -- everybody as taxpayers, everybody who participates in this economy. And I think that's why again, we've all rallied the troops and we're all trying as hard as we can to stop it however we can.


Diana Furchtgott-Roth:  Right. Plus it can just be done again in two years' time before the next election.


Caleb Kruckenberg:  Absolutely. And if they get away with these games, if they can manipulate jurisdiction the way they have been, there's no incentive for them not to do it again.


Diana Furchtgott-Roth:  Right. Exactly. Yes. Well, the next question is from Michael Welser. "How can an administrative act be valid which necessarily results in a breach of agreement between the lenders and loan recipients?"


Caleb Kruckenberg:  Well, it can't, and I think when we talk about who is honestly harmed the most, who is suffering the most, it's the companies -- a lot of times private companies that are servicing these loans -- that are being forced into this position where they have to just zero out these balances, strike these $10,000 off the loan. They're just being directed to do it and they don't feel like they have a choice but it's very harmful for them. It's harmful for their business, and in a lot of ways I think if anyone else was forcing them to do it or if they just did it on their own, it would be unquestionably be illegal. They would face all sorts of liability on their own. And so it's put them in a really impossible position where they have to just create the mechanism to make this happen just because the agency said so. And it's not lawful. It's not lawful. I don't even think it pretends to be lawful but the danger is that the administration might get away with it.


Diana Furchtgott-Roth:  Right. Yes. Well, now we have a question from Dennis Baird, an audience member who complains that this is too one-sided and that we should be showing both sides of the issue. So Caleb, what would the other side say against you? What are their best arguments against you?


Caleb Kruckenberg:  Well, I think the administration has been -- they've really promoted this as something that benefits working families, working people who are in economically difficult circumstances, and they have pointed out that the pandemic caused a lot of financial harm to a lot of different people. I think that is their argument and whatever you think about that argument, I don't think that answers the real question about how they've gone about this -- what the process is. Even if you agree with that aim, I think we should all be concerned by the way this went through. It would be one thing if Congress passed a cancellation policy that looked just like this, passed both houses, and was signed by the president into law. That would be a very different issue. I would still be concerned but they at least followed the rules. Here, there's nothing even remotely like that. As I said, those efforts failed. And so the president stepped in to try to do that anyway.


Diana Furchtgott-Roth:  Right. Yeah. Or it might be possible for the public service loan forgiveness programs to be adjusted slightly or to be made clearer or to be made public because from what I've understood when I've talked about this on radio and TV, many people are not aware of this option. So that's something else that the education department could do is clarify it and make it more public. Well, let's move on to the next question from Chris Haig. "Please let us know where to donate to support this litigation specifically." So that's good.


Caleb Kruckenberg:  Well, I know people at my office are always happy to hear that. The best way to support our work in this case and other cases is, go to our website which is We have a case page just about this litigation. You can sign up to our newsletter, you can reach out to us. We'd love to talk to you obviously. But you can also learn about some of the other work we do. As much as I would like to think this is the only problem we're facing, we all know better and this is what I do all day long. I fight against these issues and so if it's not this, it's something else. But this just happens to be such a vast, such an important issue that we had to get involved immediately.


Diana Furchtgott-Roth:  Yeah. Well, a question from David Tryon. "Does this program violate the Antideficiency Act in your opinion?"


Caleb Kruckenberg:  So I'm not going to give an opinion on that. I'd like to say it does. I don't know. And I don't know enough about the Antideficiency Act. I don't know enough about these --


Diana Furchtgott-Roth:  Perhaps you could explain to our listeners what the Antideficiency Act is in case some of them don't know.


Caleb Kruckenberg:  Well, I'll say this. I know at a very vague level what the Antideficiency Act is and what it does. I hesitate to even talk about it because this is not my expertise.


Diana Furchtgott-Roth:  Yeah.


Caleb Kruckenberg:  But what I will say is, keep them coming. Keep those theories coming. Keep those ideas coming because we all know this is illegal. We just don't know what's going to win the day.


Diana Furchtgott-Roth:  So Richard Mantel is asking "Has anyone to you knowledge sought to sue on the theory that since they incurred and had to pay off interest loans before the new policy was enacted, they have been unfairly penalized vis a vis those who have incurred loans they now do not have to pay?" And I'd also like to add some people might have worked to fund their college education and not had to incur loans at all or gone to a community college rather than a four year college where tuition and fees are much lower.


Caleb Kruckenberg:  Well, what I will say is that I've heard from a lot of people since I've been involved in this litigation and that is a very common concern that people say things to me all the time. They say "You know what? I made the choice not to go to college because of this. Because I didn't want to take out loans I couldn't pay back." Or "I worked two jobs when I was in college and paid it off." Or "I worked hard afterward, and I paid off my loans." And I think this is an insult to people who did that, people who worked hard, who took responsibility for their own borrowing. It is an insult to them. I'm not aware of a case that has raised that theory of standing. There may be some. And again, I hope it's successful. I think courts are going to say that that is too remote. That is too tangential of a harm to allow you to sue but I'd love to be proven wrong on that. So we'll see.


Diana Furchtgott-Roth:  Right. Yes. Well, the next question is from Carl Shneider. "Would a congressperson who must originate any spending bill have standing to allege that this is a gift of public funds without congressional authorization?"


Caleb Kruckenberg:  So I believe that Congress itself, and what I mean by that is a majority of one of the chambers, could have standing to challenge this. They would likely be able to challenge it. The problem as we sit here today is that the president's party has a majority of both chambers and so they're not going to sue to stop it. That could change. That could change after the election. That could change in the early part of next year but at that point, it may be too late. I do not believe an individual member would be able to maintain a lawsuit. It's something we've considered. It's something we've discussed. I don't know. And again, on all of these I'd love to be wrong about this, but I do not believe an individual member could do that.


Diana Furchtgott-Roth:  And now the HEROES Act supposedly justified writing off these loans but there are other loans also that the government has. If this goes through then would there be an opportunity to write off other kinds of federal loans with other presidents in the future?


Caleb Kruckenberg:  Well, the short answer is yes but let me qualify that. The HEROES Act talks about federal student loans and what they talk about is waiving provisions of existing student loan programs or statutes under the HEROES Act. And so what at least the president is saying now, what the Department of Education has claimed is they've said, "That means we can change any of the rules. We can do anything we want to under any federal student loan program."


Conceivably, if that is true, if they really do have that power, they could zero out every balance if they wanted to. Conceivably, they could say that -- they could change the public service loan forgiveness program. They could just say you only have to make two payments. They could do essentially whatever they want within the student loan system, and I do not think it would be hard to imagine a situation where they would say "Okay. Fine. Student loans never have to be repaid for anyone." They certainly are claiming they have that power. I mean, if they did that that would be massively transformational in this country and change the entire higher education model. So this is a very serious concern and a very serious precedent that they're trying to set.


Diana Furchtgott-Roth:  Some loans probably will never be fully repaid. Do you think it's more realistic for the federal government just to admit this because they have loan balances on the books that are supposed to be repaid but some of these people are just never going to be able to repay it? Do you think that they could've chosen better and written off some of the loans that they think are unlikely to be repaid? Not the ones for recent college graduates in math and physics for example who have high earning careers ahead of them but people who incurred the debt and then did not complete the college degree and have very low levels of earnings right now. It's possible to identify these individuals from their income tax returns.


Caleb Kruckenberg:  Right. And I think this goes back to what is a proper policy and what Congress has considered. So one of the existing programs that Congress passed is called income contingent or income based repayment. And essentially, if you are a borrower, you can cap your federal student loan payments to a percentage of your income. This is under the public service loan forgiveness program as well, but this is for anybody. If you have no income then your payments are capped at essentially zero. If you're in that program for a very long period of time -- 20 years I believe -- those balances are forgiven.


And this is a choice Congress made and I think that was the idea behind it. They said "You know what? Some of these borrowers are never going to pay it back and we will eventually write these off." That is a rational decision but that's not what they've done here. I'll also just note as a fun bit of trivia. Years ago, there was a statute that passed Congress that said that federal student loan debt is not dischargeable in bankruptcy and one of the people who voted for that is Senator Joe Biden. So it's very strange when we think about this from a policy perspective what is a good idea, what's a rational idea versus what's a cheap political idea.


Diana Furchtgott-Roth:  Right. Yeah. Well, here's a question from Paul Zimmerman. If the loan forgiveness policy is still enjoined as of January 2023, what could a new Congress do to help stop it?


Caleb Kruckenberg:  Well, a new Congress could sue to stop it. I believe, most likely, because I'm a lawyer, I can't say a hundred percent, but I think they have a real good shot. I think Congress could sue to stop it and they would have a very legitimate shot at it. They would have a strong argument to say that we can challenge this as Congress. This is not what we intended, and this is completely unlawful, and if a policy is still on the books at that point, I think the Supreme Court would be very receptive to that kind of argument.


Diana Furchtgott-Roth:  Well, here's another question from Jeffrey Wood. "Is the HEROES Act sufficiently unambiguous in its terms that this interpretation would not survive review even under Chevron? Or would a court need to narrow Chevron to find in your favor?" And as you know, Chevron was a big question of discussion after West Virginia v. EPA even though it wasn't mentioned by name.


Caleb Kruckenberg:  So one of the things that West Virginia v. EPA made clear I think was that the major questions doctrine applies even before we have a conversation about Chevron. So the major questions doctrine is actually something we've seen in recent years. We saw it in the Alabama Association of Realtors case which dealt with, as a lot of you probably remember, the eviction moratorium that again was contingent on this emergency -- the pandemic. In those earlier cases, the Court said we are not going to give Chevron deference to the government because of the major questions doctrine. In West Virginia v. EPA they went a step further. They said "Well, this isn't even in the conversation. If it is a major question, we're going to take a step back and we're going to view the statute against the government. We're going to presume against them and it's up to them to say that it clearly authorizes the question." And so I think we're not even in Chevron territory. I think if we look at this statute, we have to say is it obvious, is it clear, is it unmistakable that Congress meant for this to happen when they wrote the law. And I think the obvious answer to just about anybody is absolutely not.


Diana Furchtgott-Roth:  Here's a follow up question from Jeffrey. "These loans are presumably on federal ledgers at the Department of Education as assets with associated receivables for payments accrued as revenue. If federal officials cancel these, are they in danger of violating the Antideficiency Act or other facets of federal appropriations law potentially subjecting themselves to criminal liability?"


Caleb Kruckenberg:  Well, again, I'm going to punt on the Antideficiency part of it, but what I'll go back to is, that's really what we're talking about with these $400 billion, $500 billion numbers. I mean, this is federal debt. This is debt that is owed to essentially all of us as taxpayers and it's just being written off. And so when we have a number that's $400 billion, that's the estimate of what otherwise would have come in -- what otherwise would've been paid. That's why there's a variable. I mean, I think the congressional budget office is assuming that a lot of the existing debt won't be paid for a variety of reasons. If you assume that it will be, you get a much, much higher number. I mean, this is a lot closer to a trillion dollars. So that's what's happening and essentially, they're just writing these off. These are debts that are owed to all of us. And I leave it for people much more qualified to talk about the Antideficiency Act, to talk about what that exactly means for federal agencies, for federal employees, but I can't imagine that it's good.


Diana Furchtgott-Roth:  Right. Exactly. Yes. Now, I just want to say that this adds up to about 1.6 percent of GDP, and when Prime Minister Liz Truss tries to do tax cuts in the UK for 1.4 percent of GDP, she lost her position as UK prime minister. And that is just a huge difference. It shows how much President Biden can get away with here versus how much a British prime minister could get away with over there. We have a question from Julius Lesser. "Did the president's statement that the pandemic is over remove the emergency basis for the Department of Education to act under the HEROES Act? How can he on the one hand say the emergency is over and on the other hand say there's an emergency and invoke the HEROES Act?"


Caleb Kruckenberg:  Right. I have to think that throughout this case, throughout this litigation, the Department of Education, the lawyers at the Department of Justice can't be terribly happy with the president because he has a tendency to say the quiet part loud. And we all know this is a pretext and he confirmed it a few days later. He said the pandemic is over but we still have to do this because of the pandemic. Unfortunately, the legal justification here is, is there a declared emergency? There still is. That is ongoing. That has been declared. It hasn't been rescinded and that has a lot of implications including, at least in the Department of Education's mind, the invocation of the HEROES Act. I think that's a good lesson for all of us about the dangers of emergency powers and these broad endless declarations of states of emergency. I think if that's the only lesson we get, that it's an important one that this is something we should reevaluate and we have to really be hesitant when Congress passes a law that says "Well, if there's an emergency here's some extra power."


Diana Furchtgott-Roth:  Well, this is the last question because it's 2:54 from Jeffrey Wood. "Is there any danger that a lame duck Congress could ratify this program making it politically challenging for a subsequent Congress to challenge it in court?" We're going to have a very interesting lame duck session later this year before the next Congress takes its place.


Caleb Kruckenberg:  Right. Certainly that would complicate things. We saw something similar with the eviction moratorium litigation. There was some effort to try to ratify that by Congress. I would say that legally for a variety of reasons, that doesn't really get it there. I think the Court has shown a willingness to view that kind of ratification with a lot of skepticism -- this post hoc justification. But obviously, it would make it more complicated. I don't think, as a political reality, it's likely and I go back to the efforts to try to do this before that failed. It's not just now that they've had a majority, and while a lame duck Congress has different incentives, they campaigned on this. A lot of them did. The president did. And one would think that if Congress really wanted to do it or really thought that it was appropriate, they would've already done it. And that I think really goes into what is happening here, the reality of the situation, and why it's important to fight it.


Diana Furchtgott-Roth:  Well, thank you very much, Caleb. I'd like to thank you for taking the time to talk to us about this. I'd like to thank The Federalist Society for enabling the platform that put on this discussion. I'd like to thank all of you in the audience for listening and sending your most interesting questions. Caleb, can you tell us where we can get in touch with you? If other viewers want to contact you, what's the best way to do that?


Caleb Kruckenberg:  As I said before, the best way to get in touch with me -- look about my work is our website, And I love to hear from people. I love to hear from people with problems in this kind of space and my goal is to stop these abuses big and small. So thank you very much for having me here.


Diana Furchtgott-Roth:  Okay. Well, thanks to all of you. You can get in touch with me through And Chayila thanks for setting this up, and we will now end this session. Thank you.


Chayila Kleist:  Absolutely. On behalf of The Federalist Society, I want to thank our experts for the benefit of their valuable time and expertise today. And I especially want to thank our audience for joining in and participating, bringing all your comments and questions. To add another website, we welcome listener feedback and email at [email protected]. And as always, keep an eye on our website and your emails for announcements about upcoming virtual events. Thank you all for joining us today and we're going to be adjourned.