Notice2022-18731
Notice of Debt Cancellation Legal Memorandum
Primary source
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Published
August 30, 2022
Issuing agencies
Education Department
Abstract
The Department publishes this memorandum on the Secretary's legal authority to cancel student debt on a categorical basis.
Full Text
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<title>Federal Register, Volume 87 Issue 167 (Tuesday, August 30, 2022)</title>
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[Federal Register Volume 87, Number 167 (Tuesday, August 30, 2022)]
[Notices]
[Pages 52943-52945]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-18731]
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DEPARTMENT OF EDUCATION
Notice of Debt Cancellation Legal Memorandum
AGENCY: Office of the General Counsel, Department of Education.
ACTION: Notice.
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SUMMARY: The Department publishes this memorandum on the Secretary's
legal authority to cancel student debt on a categorical basis.
FOR FURTHER INFORMATION CONTACT: Brian Siegel, U.S. Department of
Education, Office of the General Counsel, 400 Maryland Avenue SW,
[[Page 52944]]
room 6E-105, Washington, DC 20202. Telephone: (202) 987-1508. Email:
<a href="/cdn-cgi/l/email-protection#ff9d8d969e91d18c969a989a93bf9a9bd1989089"><span class="__cf_email__" data-cfemail="ff9d8d969e91d18c969a989a93bf9a9bd1989089">[email protected]</span></a>.
If you are deaf, hard of hearing, or have a speech disability and
wish to access telecommunications relay services, please dial 7-1-1.
SUPPLEMENTARY INFORMATION: The Department publishes this memorandum on
the Secretary's legal authority to cancel student debt on a categorical
basis. The debt relief memorandum is in Appendix A of this notice.
Accessible Format: On request to the program contact person listed
above under FOR FURTHER INFORMATION CONTACT, individuals with
disabilities can obtain this document in an accessible format. The
Department will provide the requestor with an accessible format that
may include Rich Text Format (RTF) or text format (txt), a thumb drive,
an MP3 file, braille, large print, audiotape, or compact disc, or other
accessible format.
Electronic Access to This Document: The official version of this
document is the document published in the Federal Register. You may
access the official edition of the Federal Register and the Code of
Federal Regulations at <a href="http://www.govinfo.gov">www.govinfo.gov</a>. At this site you can view this
document, as well as all other documents of this Department published
in the Federal Register, in text or Portable Document Format (PDF). To
use PDF you must have Adobe Acrobat Reader, which is available free at
the site.
You may also access documents of the Department published in the
Federal Register by using the article search feature at
<a href="http://www.federalregister.gov">www.federalregister.gov</a>. Specifically, through the advanced search
feature at this site, you can limit your search to documents published
by the Department.
Miguel A. Cardona,
Secretary of Education.
Appendix A--Debt Cancellation Legal Memorandum
TO: Miguel A. Cardona Secretary of Education
FROM: Lisa Brown General Counsel
DATE: August 23, 2022
SUBJECT: The Secretary's Legal Authority for Debt Cancellation
Introduction
For the past year and a half, the Office of General Counsel
(``OGC''), in consultation with our colleagues at the Department of
Justice Office of Legal Counsel, has conducted a review of the
Secretary's legal authority to cancel student debt on a categorical
basis. This review has included assessing the analysis outlined in a
publicly disseminated January 2021 memorandum signed by a former
Principal Deputy General Counsel. As detailed below, we have
determined that the Higher Education Relief Opportunities for
Students (``HEROES'') Act of 2003 grants the Secretary authority
that could be used to effectuate a program of targeted loan
cancellation directed at addressing the financial harms of the
COVID-19 pandemic. We have thus determined that the January 2021
memorandum was substantively incorrect in its conclusions.
Given the significant public interest in this issue, and the
potential for public confusion caused by the public availability of
the January 2021 memorandum, I recommend making this memorandum
publicly available and publishing it in the Federal Register, so as
to provide the general public with notice of the Department's
interpretation of the HEROES Act, consistent with statutory
requirements. See 5 U.S.C. 552(a).\1\
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\1\ The Office of Legal Counsel has made its own analysis of the
Secretary's authority, which will be published in tandem with this
memorandum's recommended publication.
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I. The Secretary's HEROES Act Authority
The HEROES Act, first enacted in the wake of the September 11
attacks, provides the Secretary broad authority to grant relief from
student loan requirements during specific periods (a war, other
military operation, or national emergency, such as the present
COVID-19 pandemic) and for specific purposes (including to address
the financial harms of such a war, other military operation, or
emergency). The Secretary of Education has used this authority,
under both this and every prior administration since the Act's
passage, to provide relief to borrowers in connection with a war,
other military operation, or national emergency, including the
ongoing moratorium on student loan payments and interest.\2\
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\2\ See Federal Student Aid Programs (Student Assistance General
Provisions, Federal Perkins Loan Program, William D. Ford Federal
Direct Loan Program, and Federal-Work Study Programs), 85 FR 79,856,
79,856 (Dec. 11, 2020) (``Secretary [DeVos] is issuing these waivers
and modifications under the authority of the HEROES Act[.]'');
Federal Student Aid Programs (Student Assistance General Provisions,
Federal Perkins Loan Program, Federal Family Education Loan Program,
and the Federal Direct Loan Program), 77 FR 59,311, 59,312 (Sept.
27, 2012) (``In accordance with the HEROES Act, . . . Secretary
[Duncan] is providing the waivers and modifications of statutory and
regulatory provisions applicable to the student financial assistance
programs[.]''); Federal Student Aid Programs (Student Assistance
General Provisions, Federal Perkins Loan Program, Federal Direct
Loan Program, Federal Family Education Loan Program and the Federal
Pell Grant Program), 68 FR 69,312, 69,312 (Dec. 12, 2003)
(``Secretary [Paige] is issuing these waivers and modifications
under the authority of section 2(a) of the Higher Education Relief
Opportunities for Students (HEROES) Act of 2003[.]'').
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Specifically, the HEROES Act authorizes the Secretary to ``waive
or modify any statutory or regulatory provision applicable to the
student financial assistance programs'' if the Secretary ``deems''
such waivers or modifications ``necessary to ensure'' at least one
of several enumerated purposes, including that borrowers are ``not
placed in a worse position financially'' because of a national
emergency. 20 U.S.C. 1098bb(a)(1), (2)(A).
Several provisions of the HEROES Act indicate that Congress
intended the Act to confer broad authority under the circumstances,
and for the purposes, specified by the Act. First, the Act grants
authority ``[n]otwithstanding any other provision of law, unless
enacted with specific reference to this section.'' Id. Sec.
1098bb(a)(1). Second, the Act authorizes the Secretary to waive or
modify ``any'' statutory or regulatory provision applicable to the
student financial assistance programs. Id. Sec. 1098bb(a)(1),
(a)(2). Third, the Act expressly authorizes the Secretary to issue
such waivers and modifications as he ``deems necessary in connection
with a war or other military operation or national emergency.'' Id.
Sec. 1098bb(a)(1). The Supreme Court has recognized that, in
empowering a federal official to act as that official ``deems
necessary'' in circumstances specified by a statute, Congress has
granted the official broad discretion to take such action.\3\ This
authority is not, however, boundless: it is limited, inter alia, to
periods of a war, other military operation, or national emergency
(id. Sec. 1098bb(a)(1)), to certain categories of eligible
individuals or institutions (id. Sec. 1098ee(2)), and to a defined
set of purposes (id. Sec. 1098bb(a)(2)(A)-(E)).
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\3\ Webster v. Doe, 486 U.S. 592, 600 (1988) (statute
authorizing action when an agency head ``shall deem such [action]
necessary or advisable'' ``fairly exudes deference'' to agency head
and ``strongly suggests that its implementation was `committed to
agency discretion by law' '' (second emphasis added) (some quotation
marks omitted)).
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In present circumstances, this authority could be used to
effectuate a program of categorical debt cancellation directed at
addressing the financial harms caused by the COVID-19 pandemic. The
Secretary could waive or modify statutory and regulatory provisions
to effectuate a certain amount of cancellation for borrowers who
have been financially harmed because of the COVID-19 pandemic. The
Secretary's determinations regarding the amount of relief, and the
categories of borrowers for whom relief is necessary, should be
informed by evidence regarding the financial harms that borrowers
have experienced, or will likely experience, because of the COVID-19
pandemic. But the Secretary's authority can be exercised
categorically to address the situation at hand; it does not need to
be exercised ``on a case-by-case basis.'' Id. Sec. 1098bb(b)(3).
That is, he is not required to determine or show that any individual
borrower is entitled to a specific amount of relief, and he instead
may provide relief on a categorical basis as necessary to address
the financial harms of the pandemic.
II. The January 2021 Memorandum
On January 7, 2021, Secretary DeVos resigned from her position
as Secretary of Education, effective January 8, 2021. On January 13,
a news outlet published a memorandum signed January 12 by the then-
Principal Deputy General Counsel, addressed to ``Betsy DeVos[,]
Secretary of Education.'' \4\
[[Page 52945]]
Two substantively identical versions of that memorandum were posted
to the website of the Office of Postsecondary Education, dated
January 12 and January 18 (collectively, the ``January 2021
memorandum''). Having reviewed the memorandum in consultation with
the Office of Legal Counsel, we have determined that although it
accurately describes the core features of the HEROES Act, its
ultimate conclusions are unsupported and incorrect.\5\ As such, it
should be rescinded.
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\4\ Michael Stratford, Trump Administration Tries to Hamstring
Biden on Student Loan Forgiveness, Politico (Jan. 13, 2021).
\5\ In addition to determining that the conclusions contained in
the January 2021 memorandum were substantively incorrect, we have
determined that the memorandum was issued in contravention of then-
effective Department processes for issuing significant guidance. An
Interim Final Rule issued by the Department on October 5, 2020,
pursuant to Executive Order 13,891, established additional
procedures for the issuance of guidance documents. See Rulemaking
and Guidance Procedures, 85 FR 62,597 (Oct. 5, 2020); see also Exec.
Order No. 13,891, 84 FR 55,235 (Oct. 9, 2019). That rule established
new requirements for the issuance of guidance and ``significant
guidance,'' defining the latter term to include guidance documents
that ``[r]aise novel, legal, or policy issues arising out of legal
mandates [or] the President's priorities.'' 85 FR at 62,608. The
public dissemination of the January 2021 memorandum violated a
number of provisions of this rule, including that guidance must be
``accessible through the Department's guidance portal,'' and that,
barring compelling cause, all significant guidance may be published
only after a 30-day public comment period and review by the Office
of Management and Budget under Executive Order 12,866 of September
30, 1993. Id. That rule was rescinded in September 2021, 86 FR
53,863 (Sept. 29, 2021), but it was in effect at the time of the
January 2021 memorandum's publication. Thus, OGC has determined that
the January 2021 memorandum was not properly promulgated.
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As an initial matter, the bulk of the January 2021 memorandum's
discussion of HEROES Act authority describes and quotes the key
provisions of the HEROES Act. The memorandum explains that the
HEROES Act provides the Secretary ``authority to provide specified
[\6\] waivers or modifications to Title IV federal financial student
aid program statutory and regulatory requirements because of the
declared National Emergency,'' identifies that declared emergency as
the COVID-19 national emergency declared on March 18, 2020, and
characterizes this authority as ``narrowly cabined'' to achieving
five enumerated purposes, including ``ensur[ing] that . . .
recipients of student financial assistance under title IV of the Act
who are affected individuals are not placed in a worse position
financially in relation to that financial assistance because of
their status as affected individuals.'' Jan. 2021 Mem. at 5-6.
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\6\ We read the term ``specified'' as acknowledging statutory
limits on HEROES Act authority, including the enumerated purposes of
20 U.S.C. 1098bb(b)(1), and not as suggesting any atextual
limitations on the Act's clear grant of authority to waive or modify
``any'' statutory or regulatory provision applicable to student aid
programs, provided other HEROES Act requirements are met.
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The memorandum goes on to read in purported limitations on the
scope of relief that may be afforded that are contrary to the clear
text of the Act. The memorandum advances three primary arguments in
support of a conclusion that ``Congress never intended the HEROES
Act as authority for mass cancellation, compromise, discharge, or
forgiveness of student loan principal balances, and/or to materially
modify repayment amounts or terms.'' Jan. 2021 Mem. at 6.
First, the memorandum recites certain statutory limits on the
Secretary's authority, including the HEROES Act's statutory
definition of individuals eligible for relief, 20 U.S.C. 1098ee(2),
and the enumerated purposes for which waivers or modifications may
be issued, id. Sec. 1098bb(a)(2).
The memorandum is correct that such statutory provisions exist
but provides no support for the suggestion that these provisions
impose limitations beyond their clear terms. See Jan. 2021 Mem. at
6.
Second, the memorandum points to the HEROES Act's references to
avoiding ``defaults'' and a ``cross-cite'' to a separate provision
of the Higher Education Act relating to the ``return'' of student
loan funds, concluding that these provisions ``provide a strong
textual basis for concluding Congress intended loans to be repaid.''
Id. But these provisions--which identify as allowable purposes
issuing waivers or modifications to avoid defaults and granting
relief from certain requirements that borrowers return certain
payments--in no way impose a requirement that any exercise of HEROES
Act authority must ensure that every borrower is left with a
remaining balance on their loan. The reference to ``defaults''
authorizes the Secretary to ``avoid'' defaults; it does not require
that he preserve their possibility. And the Higher Education Act
provisions regarding the ``return'' of overpayments relate only to
specific processes and calculations under which students are
required to return grant and loan assistance if they withdraw from
their school, see 20 U.S.C. 1091b; there is no conceivable reading
of this provision that reflects a congressional intent that all
borrowers, including those not covered by the section 1091b
overpayment provisions, are required to repay their loans in full.
Third, the memorandum concludes that the authority to ``waive or
modify any statutory or regulatory provision'' is limited to the
definition of ``modify'' that was adopted for an unrelated
telecommunications statute, and ``does not authorize major
changes.'' Jan. 2021 Mem. at 6. The memorandum draws its definition
of modify from MCI Telecomms. Corp. v. Am. Telephone & Telegraph
Co., 512 U.S. 218, 225 (1994). In that case, the statutory
provisions under review applied no clear limiting principle to a
grant of modification authority to the FCC; the statute allowed
modifications ``in [the FCC's] discretion and for good cause
shown.'' Id. at 224 (quoting 47 U.S.C. 203 (1988 ed. and Supp. IV)).
Here, the HEROES Act itself clearly speaks to the scope of
modification authority: the Secretary may make those modifications
as may be ``necessary to ensure'' specific enumerated purposes. 20
U.S.C. 1098bb. The Secretary may not make modifications going beyond
that limit, but nor is he restricted to a degree of modifications
that would fall short of ``ensur[ing]'' the enumerated purposes are
achieved. Moreover, the HEROES Act broadly authorizes the Secretary
to act as he ``deems necessary'' to ``waive or modify'' any
statutory or regulatory provision applicable to the student aid
program. The January 2021 memorandum's interpretation of ``modify''
would read the Act to authorize the Secretary to waive entirely or
to make non-major changes in the relevant statutory or regulatory
provisions, but not authorize the Secretary to do anything in
between. That interpretation is illogical, and nothing in the HEROES
Act's broad grant of authority supports such a reading.
We have discussed these and other aspects of the January 2021
memorandum with the Office of Legal Counsel, and we further find
persuasive the discussion of the January 2021 memorandum offered in
the Office of Legal Counsel's memorandum, which will be published in
tandem with this memorandum's recommended publication.
Conclusion
For the reasons detailed above, I recommend that you (1)
determine that the January 2021 memorandum is formally rescinded as
substantively incorrect and (2) authorize publication in the Federal
Register and public posting of this memorandum as the Department's
interpretation of the HEROES Act.
[FR Doc. 2022-18731 Filed 8-29-22; 8:45 am]
BILLING CODE 4000-01-P
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