The reason President Biden might not be able to cancel student debt after all

The can-kicking on student loan forgiveness is about to end. With the current repayment pause set to expire in August, and no obvious rationalization for yet another extension, the Biden administration knows it must act soon. Forcing millions of borrowers into repayment on the eve of midterm elections that experts are predicting could be brutal for Democrats would be political catastrophe. Even U.S. Department of Education Secretary Miguel Cardona finally admitted several weeks ago that borrowers will eventually have to start repaying their outstanding loan debts.

The dollar cost of forgiveness is not cheap. Some estimates put it at more than $320 billion. That would dwarf other well-known, large-scale federal welfare programs like SNAP, for example, which currently costs roughly $68 billion a year.

Yet it would also fundamentally, and retroactively, override decades of federal financial aid policy. These would now be taxpayer dollars with no expectation of being paid back.

That forces the question: does blanket loan forgiveness turn federal loans into federal grants?

The answer could very well determine what authority the president has to actually act on student loan debt. Loans and grants are different financial instruments. If Congress wanted federal aid to be solely in the form of grants, it would have never created a loan program to begin with.

Instead, it not only created both loan and grant programs, it has chosen over the past 50 years to prioritize each differently. Every new loan program Congress created, and every loan limit increase it approved, was a clear preference to provide student aid with debt financing. Every call over the past 30 years to shore up the declining purchasing power of the federal Pell Grant was Congress expressing it does not believe providing the majority of federal financial aid through grants makes sense.

At any point in the past Congress could have opted to fund grants more than loans. It repeatedly chose not to.

If the way Congress pays for federal programs matters, then the real question around executive authority to forgive student loan debt is not whether the ambiguous wording within the federal Higher Education Act allows for it. The bigger issue is whether President Biden can set aside, or override, how the legislative branch chooses to spend taxpayer dollars.

Would the president converting a loan instrument approved by Congress into an entirely different grant product be an example of executive branch overreach? Does a president have the authority to retroactively change how Congress spends taxpayer money? Would forgiveness essentially create a several-hundred-billion-dollar grant program that only Congress can legally authorize?

The big gamble for the Biden administration and forgiveness advocates right now is the possibility that the courts — potentially even the Supreme Court — be asked to weigh in on a constitutional matter that feels more clear-cut than parsing the wording in existing law. Even worse would be a legal challenge that does not get resolved until after the midterm elections.

If the devil is in the details, to this point there have been surprisingly few. A memo the president asked the U.S. Department of Education to draft on the options for using executive authority was authored more than a year ago but still remains hidden from public scrutiny. And despite the president repeatedly saying forgiveness is a matter for Congress to decide, the first House bill to propose it did not come out until this past February. The Senate, which has some of the highest-profile public advocates for forgiveness in Sens. Bernie Sanders (I-Vt.), Chuck Schumer (D-N.Y.) and Elizabeth Warren (D-Mass.), has yet to introduce a companion bill.

Student loan forgiveness continues to capture the public’s attention. For better or worse, federal student aid policy is going to begin fundamentally changing over the next several months. The only question right now is whether the current administration, Congress or the courts end up playing the biggest role in whatever path it heads down.

Carlo Salerno, Ph.D., is an education economist and co-author of “Student Financial Success: The surprising path to fix the college completion crisis.”