Biden's Debt Cancellation Gambit — A Constitutional Rebuke, a Regressive Policy, and a Political Miscalculation All in One
The Scheme and Its Collapse
In August 2022, the Biden administration announced an executive action that would cancel up to $10,000 in federal student loan debt for borrowers earning below $125,000 annually, with up to $20,000 in relief for Pell Grant recipients. The administration claimed authority for the action under the HEROES Act of 2003, a law passed in the aftermath of the September 11 attacks to allow loan modifications for servicemembers and disaster victims. The legal justification was, to put it charitably, creative — and in June 2023, the Supreme Court unanimously rejected it in Biden v. Nebraska, with Chief Justice John Roberts writing that the HEROES Act conferred no such sweeping power and that the administration had run headlong into the "major questions doctrine."
The major questions doctrine, articulated and reinforced in a series of recent Court decisions, holds that when an executive agency claims authority to take action of vast economic and political significance, it must point to clear congressional authorization. The Biden administration could not, because none existed. Congress had never passed a student debt cancellation bill — not in 2009 when Democrats held a supermajority, not in 2021 when they controlled both chambers. The executive action was, from its inception, an attempt to accomplish legislatively what could not be accomplished legislatively.
The Constitutional Principle at Stake
Conservatives have long argued that the separation of powers is not a technicality — it is the architecture that prevents the concentration of authority in a single branch of government. The power of the purse belongs to Congress. Spending decisions of this magnitude — the Penn Wharton Budget Model estimated the cancellation would cost between $469 billion and $519 billion over ten years — are precisely the kind of consequential policy choices the Constitution assigns to the legislative branch, not to executive agencies acting through emergency authority designed for an entirely different purpose.
The Roberts Court's reasoning was direct: the administration's reading of the HEROES Act would effectively allow the executive to restructure a half-trillion-dollar federal loan portfolio based on a post-9/11 statute that was never intended to authorize anything of the kind. That is not statutory interpretation — it is statutory invention. The decision was a vindication of the originalist principle that words in a law mean what they were understood to mean when written, not what a subsequent administration finds convenient.
This matters beyond the immediate case. The Biden administration's approach to executive power — governing through agency rulemaking and emergency authority invocations when Congress refused to act — established a precedent that any future administration could exploit. Conservatives who cheered the Court's ruling should also recognize that a robust major questions doctrine protects against executive overreach regardless of which party occupies the White House.
A Regressive Policy Disguised as Populism
Leaving aside the constitutional defects, the policy itself was poorly designed even on its own progressive terms. The distributional analysis was damning. A 2022 study from the National Bureau of Economic Research found that the top 40 percent of earners by income held roughly 60 percent of outstanding student debt — a consequence of the fact that graduate and professional degree holders, who disproportionately pursue high-earning careers, carry the largest loan balances. A blanket cancellation scheme would have transferred hundreds of billions of dollars to lawyers, doctors, MBAs, and other college-educated professionals with above-average lifetime earnings.
Meanwhile, approximately 60 percent of American adults do not hold a four-year college degree. Those workers — tradespeople, manufacturing employees, healthcare support staff, small business owners — would have received nothing from the cancellation while bearing a share of its cost through higher taxes or additional government debt. The policy asked a welder in Ohio to subsidize the law school debt of an attorney in Manhattan. That is not economic justice by any reasonable definition.
The Committee for a Responsible Federal Budget estimated that the cancellation, combined with the administration's separate income-driven repayment plan revisions, would add hundreds of billions to the federal deficit at a moment when inflation was already running at multi-decade highs. The Federal Reserve was raising interest rates aggressively to cool an overheated economy; the administration was simultaneously proposing to inject hundreds of billions in effective consumer purchasing power through debt relief. The macroeconomic incoherence was striking.
The Strongest Counter-Argument
The most serious defense of debt cancellation is not the legal one — even its proponents largely conceded the HEROES Act argument was a stretch. The substantive case is that the federal student loan system has been structurally predatory: interest capitalization rules, the non-dischargeability of student debt in bankruptcy, and the government's role in expanding loan availability without regard to graduate outcomes have created genuine hardship for a cohort of borrowers who were misled about the value of their degrees.
This argument has real force. The federal student loan system does have serious structural problems, and there are borrowers — particularly those who attended predatory for-profit institutions — who have legitimate claims to relief. But the answer to a broken system is legislative reform, not executive fiat. Congress could pass targeted relief for defrauded borrowers. Congress could reform bankruptcy rules. Congress could restructure income-driven repayment. The administration chose the maximalist executive action precisely because the legislative route was politically difficult — and that political difficulty reflects the genuine ambivalence of the American public about broad-based cancellation.
The Political Miscalculation
The episode also revealed a strategic miscalculation. The administration's repeated attempts to revive some version of debt cancellation after the Supreme Court's ruling — through alternative legal theories and targeted forgiveness programs that have faced their own legal challenges — kept the issue alive as a political liability. Voters who do not hold college degrees, a group that has been trending Republican for over a decade, saw the policy as confirmation that the Democratic Party's priorities were oriented toward its college-educated professional base rather than the working class it once claimed to represent.
The failed cancellation gambit is, in this sense, a microcosm of a broader political realignment. When the party of FDR's New Deal coalition is spending its executive capital on debt relief for graduate degree holders, it is signaling something important about where its coalition has moved — and why so many working-class voters have moved in the opposite direction.
When a president bypasses Congress to spend half a trillion dollars on a policy that primarily benefits the affluent, and the Supreme Court has to explain why that is not how the Constitution works, the republic has had a good day — even if the lesson took longer to arrive than it should have.
