Student Loans

Lawsuit: It's Time To Start Paying Off Those Student Loans Again

The lawsuit claims that the pause has cost taxpayers "$160 billion and counting."


Student loan payments have been paused since the onset of the COVID-19 pandemic in March 2020. However, in the three years since the pause began, the economic and legal justification for the continued moratorium has grown increasingly weak.

Not only has the economy recovered in full force—leading to the lowest unemployment rate in over 50 years—but President Joe Biden himself has declared that "the pandemic is over." Yet, student loan payments are still paused—with the same, flimsy justification that the pandemic emergency rages on and student loan borrowers simply can't be expected to shoulder the unsurmountable burden of paying back their loans, especially with a Supreme Court ruling on sweeping student loan forgiveness eminent.

However, a new legal challenge has emerged to try to end the absurdity. On Thursday, the Mackinac Center for Public Policy, a conservative think tank, filed a lawsuit seeking a preliminary injunction to end the pause.

The suit argues that, while a six-month pause on student loan repayments was authorized by the CARES Act—which was signed just seven days after the Trump administration announced the original 60-day moratorium on student loan repayment—all following extensions have occurred without congressional approval or any other legitimate legal justification.

"In all, the Moratorium and its serial extensions have effectively extended Congress's six-month suspension of student-loan payment obligations and interest accrual for an additional 32 months and counting—more than five times the length of the suspension Congress legislated to expire September 30, 2020," the 37-page complaint states. "The Department has shifted among different purported legal bases for these extensions and, for some extensions, has failed to invoke any legal basis at all."

While the Department of Education has invoked several justifications for the eight separate extensions on the moratorium, the complaint directs particular attention to the DOE's use of the Higher Education Relief Opportunities for Students (HEROES) Act—a 9/11-era piece of legislation that was used, at least in part, to justify seven of the eight extensions to the moratorium.

The HEROES Act was passed in 2003 and allows the federal government to provide student loan relief to college students who withdraw from school in order to enter active military duty during a time of "war or other military operation or national emergency."

While the Department of Education has long claimed that the COVID pandemic presents such a national emergency, the lawsuit contends that a yearslong student loan repayment pause is simply out of the HEROES Act's scope.

The Act was explicitly designed to help a very specific group of Americans—those that leave school to serve in a war. "Recasting the HEROES Act from a statute permitting limited modifications for targeted groups (primarily those serving in the military during wartime) to one that can suspend payments and cancel interest for all 45 million borrowers is a change so significant" that it fundamentally revises the statue, the lawsuit states.

Following this claim, the lawsuit argues that because both supposed legal justifications are illegitimate, the extended moratorium violates the Constitution's Appropriations Clause. "Congress only authorized the expenditure of funds to pay for a six-month debt-relief program—approximately $30 billion—and not a penny more," the complaint states. "Every additional month of the Moratorium has resulted in unlawful cancellation of approximately $5 billion of debt owed to the U.S. Treasury."

The student loan repayment moratorium is one of the strangest holdovers of the COVID-era government spending spree. Whatever economic—and legal—justification to suspend loan repayment has long since expired, making each new extension seem more bizarre than the last.

In the meantime, the cost of the payment pause keeps ticking up. As the lawsuit notes, "The Moratorium has been wiping out $5 billion of assets owned by the United States every month for the past 32 months without any statutory authorization or appropriation, at a cumulative cost to taxpayers of $160 billion and counting."