Lawsuit seeks to stop Biden from forgiving student loans

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Topline

An Indiana lawyer from a conservative law firm sued the Biden administration in federal court on Tuesday, asking a judge to block the government’s policy of forgiving up to $20,000 per person in student loans days before its entry into force in October.

Highlights

Frank Garrison, an attorney for the libertarian nonprofit Pacific Legal Foundation, sued the Department of Education and its secretary Miguel Cardona in federal court in Indiana and filed a motion asking the court to block the policy immediately. before it takes effect on Saturday.

Garrison has student loans that were forgiven under the Civil Service Loan Forgiveness Program, which allows debts to be forgiven without paying federal or state tax on them, but he lives in the one of at least six states that tax most canceled loans as income, meaning it would have to pay state tax if the loans are canceled under President Joe Biden’s program.

As a result, Garrison alleges that canceling the president’s student loan — which, in his case, should happen automatically — will cause him to pay $1,000 in state taxes and “incur a financial obligation that he doesn’t have to pay.” would not have faced otherwise”.

The conservative lawyer also takes issue with the student loan program more generally, arguing that it should have been approved by Congress and that the White House exceeded its authority by implementing it unilaterally.

The lawsuit alleges that the federal government violated the Administrative Procedure Act, the Constitutional Separation of Powers Act, and the doctrine of non-delegation, which prohibits the executive branch from implementing laws without congressional approval. .

White House spokesman Abdullah Hasan said in a statement to Forbes the lawsuit is ‘without merit’ because people can ‘choose to opt out’ of debt relief and ‘no one will be forced’ to have their loans forgiven.

crucial quote

“Nothing about loan forgiveness is legal or proper,” the lawsuit alleges. “In a tailspin around Congress, the administration is threatening to enact deep, transformational policy that will have untold economic impacts.”

Chief Spokesperson

“Why would this group make this baseless claim?” Hassan said Forbes in an email regarding the lawsuit. “Because opponents of the debt relief plan are trying everything they can to stop this program which will bring much needed relief to working families.”

Large number

About $400 billion. That’s how much the student loan forgiveness program is expected to cost the federal government, according to an estimate released Monday by the Congressional Budget Office.

To monitor

Biden’s student loan forgiveness plan is expected to begin rolling out in October. The administration says debt will be automatically forgiven for the roughly 8 million borrowers for whom the federal government already has income data — the program only applies to people earning less than $125,000 a year — while that others will have to seek relief. This application should be launched at the beginning of October.

Key Context

Biden announced in August that the federal government would forgive student loans for many borrowers, after months of speculation. The rebate program will relieve $10,000 of debt for people earning less than $125,000 ($250,000 for a household) or $20,000 of debt for federal Pell Grant recipients. The Biden administration justified the move by citing the federal HEROES Act, which was enacted in response to the war in Iraq and allows student financial aid provisions to be waived or changed if “necessary as part of a war or other military operation or national emergency”. .” The student loan forgiveness, while supported by most Democrats, was widely decried by the GOP, and the Washington Post Republicans reported strategizing how to challenge the program in court. Garrison’s lawsuit could circumvent a problem the Conservatives had faced about how to fight the policy: They need a plaintiff who has standing to sue, which means the plaintiff needs a valid reason to sue and claim that they have been harmed by the loan forgiveness program. State attorneys general or other taxpayers would likely not be able to prove that they had standing in court. His lawsuit is not the first to be filed against the pardon program, after an Oregon landlord and former GOP Senate candidate sued the government earlier in September, alleging the law will increase the interests that is paying on his mortgage.

Further reading

Biden’s Student Loan Forgiveness Plan: Up to $20,000 in relief, $125,000 income cap – Here’s all the other details (Forbes)

Biden’s student debt forgiveness plan will cost $400 billion, CBO says (Forbes)

Republicans plotting lawsuits to block Biden’s student debt plan (Washington Post)

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