The Biden Administration Extends the Pause on Federal Student Loan Payments: Legal Considerations for Congress

Legal Sidebari

The Biden Administration Extends the Pause
on Federal Student Loan Payments:
Legal Considerations for Congress
January 27, 2021
Last year, both the Trump Administration and the 116th Congress granted temporary relief to certain
student loan borrowers in response to the COVID-19 pandemic. On the first day of his presidency,
President Joe Biden requested that the Department of Education (ED) extend the duration of this relief.
This Legal Sidebar analyzes the asserted statutory bases for these relief measures and identifies pertinent
legal considerations for Congress. (A separate CRS product discusses this issue from a policy
perspective.)
The Statutory Framework
Title IV of the Higher Education Act (HEA) establishes several federal student loan programs to help
borrowers finance a postsecondary education. ED “holds”—that is, owns and collects payments on—most
of the outstanding loans made under those programs. The Higher Education Relief Opportunities for
Students (HEROES) Act of 2003 authorizes the Secretary of Education (Secretary) to “waive or modify
any statutory or regulatory provision applicable to” the Title IV loan programs “as the Secretary deems
necessary” to ensure that individuals adversely affected by a Presidentially-declared national emergency
“are not placed in a worse position financially.” (The HEROES Act discussed in this Sidebar is not the
same as the identically named COVID-19 relief bill that the House of Representatives passed in the 116th
Congress.) The HEROES Act requires the Secretary to publish such waivers or modifications “by notice
in the Federal Register,” but the HEROES Act does not require the Secretary to conduct a rulemaking
proceeding to effectuate a waiver or modification. The Secretary may “exercise the waiver or
modification authority . . . on a case-by-case basis,” or he can use this authority for classes of persons
affected by a national emergency.
The following example illustrates how the HEROES Act operates: Under ED regulations, borrowers
participating in certain income-driven student loan repayment plans must provide their loan holders
documentation regarding their income and family size to remain eligible. The Secretary has invoked the
HEROES Act to waive that requirement for borrowers who cannot submit that documentation by the
annual deadline because they “reside or are employed in a disaster area.”
Congressional Research Service
https://crsreports.congress.gov
LSB10568
CRS Legal Sidebar
Prepared for Members and
Committees of Congress

---

Congressional Research Service
2
Student Loan Relief During the Trump Administration
During the Trump Administration, both Congress and the Executive afforded temporary relief to certain
Title IV borrowers to mitigate the COVID-19 emergency’s economic impact. Following President
Trump’s declaration of a national emergency with respect to the pandemic under the National
Emergencies Act (NEA), the Secretary announced in March 2020 that “[a]ll borrowers with federally held
student loans” would “automatically have their interest rates set to 0% for a period of at least 60 days.”
The Secretary also announced that “each of these borrowers” would “have the option to suspend their
payments for at least two months.” The Secretary’s March 2020 announcement did not specify the
statutory authority for this relief.
The following week, the Secretary announced that ED would also “halt collection actions and wage
garnishments to provide additional assistance to borrowers.” Again, the Secretary’s announcement did not
specify which statute she invoked to provide this assistance.
A few days later, Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act,
which codified aspects of the relief the Secretary previously granted. Section 3513 of the CARES Act
required the Secretary to “suspend all payments due for” certain Title IV loans held by ED “through
September 30, 2020.” Among other things, Section 3513 also (1) required the Secretary to “suspend all
involuntary collection” activities on such loans during the payment suspension period, and (2) provided
that interest would not accrue on such loans during that period.
The 116th Congress did not pass legislation extending Section 3513’s sunset date. Instead, in August
2020, the Secretary purported to extend the student loan relief through December 31, 2020. Although the
Secretary’s August 2020 announcement did not specify the statutory authority for that extension, ED later
published a Federal Register notice asserting that the Secretary based the March and August relief
measures on the HEROES Act. Specifically, the notice stated the Secretary invoked the HEROES Act to:
 waive the application of ED regulations governing interest accrual and payment on
certain Title IV loans; and
 “modify the terms of the benefits provided under” Section 3513 of the CARES Act “such
that they will continue to be provided to borrowers until December 31, 2020.”
The Secretary invoked the HEROES Act again in December 2020 to extend this student loan relief
through January 31, 2021.
Student Loan Relief During the Biden Administration
On Inauguration Day, President Biden announced that “the Acting Secretary of Education will extend the
pause on federal student loan payments and collections and keep the interest rate at 0%.” Although the
President’s announcement did not specify how long this extension would last, ED’s website suggests the
extension will remain in effect “at least through Sept. 30, 2021.” Additional details about the extension
are currently unavailable.
Legal Issues and Considerations for Congress
The relief measures discussed above raise unresolved questions regarding the Secretary’s authority to
waive or modify statutes and regulations in response to a national emergency. As far as CRS’s research
reveals, no court has interpreted or applied the HEROES Act or reviewed ED’s actions taken pursuant to
the Act. Thus, it appears no court has considered where the outer boundaries of the Secretary’s HEROES
Act authorities lie. Moreover, before the COVID-19 pandemic, Secretaries generally invoked the
HEROES Act relatively narrowly to grant relief to limited subsets of borrowers, such as deployed military

---

Congressional Research Service
3
servicemembers or victims of certain natural disasters. As a result, judicial and administrative precedent
cast little light on whether the HEROES Act authorizes the COVID-19 relief measures discussed here.
When an agency, such as ED, interprets a statute it administers, courts sometimes defer to that
interpretation under a doctrine called “Chevron deference” if (1) the statute is ambiguous, and (2) the
agency’s interpretation is reasonable. Thus, if a litigant challenged a Secretary’s waiver or modification of
a statute or regulation under the HEROES Act, the court would likely assess whether the Secretary’s
action was based on a permissible reading of the terms “waive” and “modify.” Because the HEROES Act
does not define those terms, the court might take guidance from how judges have interpreted those words
in other federal statutes. For instance, in MCI Telecommunications Corp. v. AT&T Co., the Supreme Court
considered a provision of the Communications Act of 1934 that required certain entities to file tariffs with
the Federal Communications Commission (FCC), but also authorized the FCC, “for good cause shown,”
to “modify any requirement” imposed by the tariffing provision. The FCC purported to invoke its
modification authority to make tariff filings optional for many communications industry participants. To
evaluate whether the power to “modify any requirement” authorized the FCC’s action, the Court
consulted the dictionary definition of “modify.” The Court concluded that “modify” contemplates only a
“moderate change” to the thing being modified, not a “fundamental” change. In the Court’s view,
rendering a “crucial provision of the statute” like the tariffing requirement inapplicable to “40% of a
major sector of the industry” was “much too extensive to be considered a ‘modification’” under the
dictionary definition of that term. The Court thus declined to defer to the FCC’s interpretation of the
modification provision under Chevron, and invalidated the FCC’s action.
If a court deemed the HEROES Act sufficiently analogous to the statute in MCI, it might conclude that
the power to “modify any statutory or regulatory provision applicable to the” Title IV programs likewise
does not authorize the Secretary to make fundamental changes to statutes or regulations. If so, the court
would analyze whether extending Section 3513’s sunset date, or otherwise granting temporary relief to
borrowers of ED-held Title IV loans, qualifies as a fundamental change to applicable law. The answer to
that question is unclear, as courts have not yet considered whether and how MCI applies to an agency
action like the temporary relief measures at issue here. While several cases hold that permanently
eliminating something—like a statutory penalty or a benefit plan—is too fundamental a change to be a
“modification” under MCI, it is less clear whether temporarily suspending something—here, a federal
agency’s statutory and regulatory rights to collect payments and charge interest on a loan—is sufficiently
“moderate” to qualify as a “modification.” How long the suspension period lasts may in turn influence
whether the Secretary’s modifications to applicable law are “moderate” or “fundamental.”
At least two other points make MCI’s potential application to the COVID-19 student loan relief measures
uncertain. First, MCI only illuminates how a court might interpret the word “modify”; it does not cast light
on how a court might interpret the HEROES Act’s separate authorization to “waive” statutory and
regulatory provisions. Second, the MCI Court did not base its ruling on the dictionary definition of
“modify” alone; it also relied on “contextual indications” that Congress would not have authorized the
FCC to curtail the Communication Act’s tariff-filing requirement significantly. Because “[r]ate filings are
. . . the essential characteristic of a rate-regulated industry,” the Court found it “highly unlikely that
Congress would leave the determination of whether an industry will be entirely, or even substantially,
rate-regulated to agency discretion—and even more unlikely that it would achieve that through such a
subtle device as permission to ‘modify’ rate-filing requirements.” The HEROES Act, however, has a
different subject and context than the Communications Act. A court might thus conclude the statutes are
insufficiently similar to import the definition of “modify” from one law to the other.
There is another reason why a court might decline to defer to the Secretary’s interpretation of the
HEROES Act: courts are less likely to afford an agency Chevron deference when the agency has not
announced its interpretation through rulemaking. As discussed, the HEROES Act does not require the
Secretary to conduct rulemaking when waiving or modifying a statutory or regulatory provision. Perhaps

---

Congressional Research Service
4
for that reason, the Secretary has not conducted rulemaking to implement the relief measures discussed
above. Thus, a court might not defer to the Secretary’s determination that the terms “waive” and “modify”
authorize ED to extend Section 3513’s sunset date and suspend payments, interest, and collections on ED-
held Title IV loans. That said, even when an agency interpretation is not entitled to Chevron deference, a
court may still adopt an agency’s interpretation if it is persuasive.
At least one other unresolved legal question remains. The NEA provides that national emergency
declarations last for one year, but can be annually renewed by the President. Under the HEROES Act, the
Secretary may only waive or modify a statute or regulation when the Secretary determines that doing so is
“necessary in connection with a . . . national emergency” to ensure that individuals affected by that
emergency “are not placed in a worse position financially.” If the COVID-19 emergency ends before the
date to which the Biden Administration has extended the temporary student loan relief, it may be unclear
whether that relief remains “necessary in connection with a . . . national emergency.”
Congress could potentially obviate these unanswered questions by granting temporary relief to borrowers
of ED-held Title IV loans legislatively, as it did in Section 3513 of the CARES Act.

Author Information

Kevin M. Lewis
Edward C. Liu
Legislative Attorney
Legislative Attorney





Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

LSB10568 · VERSION 1 · NEW

---