[Federal Register Volume 87, Number 167 (Tuesday, August 30, 2022)]
[Notices]
[Pages 52943-52945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[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: 
[email protected].
    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 www.govinfo.gov. 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 
www.federalregister.gov. 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]
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