Finance

Libertarian Group Sues To Block Biden Student Loan Forgiveness

Libertarian Group Sues To Block Biden Student Loan Forgiveness

A California libertarian group has sued the Biden administration over its plan to cancel student debt, calling it an illegal overreach which will end up taxing some Americans whose debt is forgiven.

“Congress did not authorize the executive branch to unilaterally cancel student debt,” said attorney Caleb Kruckenberg of the Pacific Legal Foundation, which filed the lawsuit – believed to be the first targeting Biden’s plan, AP reports. The Sacramento-based legal advocacy group filed the suit in Indiana, which is one of several states that plans to tax those whose debt is canceled by Biden’s plan.

Kruckenberg says that it’s illegal for the executive branch to create such policy “by press release, and without statutory authority.”

(Meanwhile, Biden is yanking student loan forgiveness for more than 750,000 borrowers who took federal government loans that were issued and managed by private lenders)

The suit’s plaintiff is Frank Garrison, described as a public interest attorney who lives in Indiana and is employed by the libertarian group.

Garrison is on track to get his student debt erased through a separate federal program for public servants. Although most borrowers will need to apply for Biden’s plan, Garrison and many others in that program will automatically get the relief because the Education Department has their income information on file. -AP

Garrison, the plaintiff, says that Biden’s plan would automatically cancel up to $20,000 of his debt, which would trigger an “immediate tax liability” owed to the state of Indiana.

“Mr. Garrison and millions of others similarly situated in the six relevant states will receive no additional benefit from the cancellation — just a one-time additional penalty,” read the suit.

Other states which plan to debt forgiven debt under the Biden plan are; Arkansas, California, Minnesota, Mississippi, North Carolina and Wisconsin, unless lawmakers act to change their current laws.

When asked how people could opt out of the debt forgiveness, White House press secretary Karine Jean-Pierre, who said ‘anyone can opt-out’ had no answers, after previously saying that roughly 8 million Americans would automatically receive the debt relief.

“The bottom line is this — no one who does not want debt relief will have to get that debt relief,” she said.

The White House has called the lawsuit “baseless,” suggesting that it’s nothing more than political opponents who “are trying anything they can to stop this program that will provide needed relief to working families.”

Biden’s plan will cancel $10,000 in federal student debt for those making $125,000 per year or less, and $250,000 per household. Pell Grant recipients are set to receive an additional $10,000 benefit. 

Conservative groups have called Biden’s plan legally questionable, and point out that the debt forgiveness unfairly cancels student debt at the expense of Americans who didn’t attend college – or paid off their loans.

The Biden administration has repeatedly argued that the plan is on solid legal ground.

In its legal justification for debt cancellation, the Biden administration invoked the HEROES Act of 2003, which aimed to provide help to members of the military. The law gives the administration “sweeping authority” to reduce or eliminate student debt during a national emergency, the Justice Department said in an August legal opinion.

Education Secretary Miguel Cardona has said he has the legal authority to cancel debt for people who faced hardship during the pandemic. Cardona says Biden’s plan will ensure borrowers aren’t worse off after the pandemic than they were before. -AP

Nothing about loan cancellation is lawful or appropriate,” reads the lawsuit. “In an end-run around Congress, the administration threatens to enact a profound and transformational policy that will have untold economic impacts.”

Tyler Durden
Fri, 09/30/2022 – 19:20

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