First complaint against Biden’s plan to partially forgive student debt

A lawsuit, the first of its kind, was filed in federal court on Tuesday against US President Joe Biden’s announced plan to write off part of the debts incurred by students to pay for their university education.

In his complaint filed in the state of Indiana, the plaintiff, an attorney affiliated with a libertarian group, claims that partial forgiveness of his student debt would cause him to pay more taxes to his state. He therefore asks the court to cancel the plan or freeze it.

In addition to Indiana, six other states have announced that any amount of student debt erased under Biden’s plan will be considered additional income, subject to state tax. These are Arkansas, California, Minnesota, Mississippi, North Carolina and Wisconsin.

“Congress did not authorize the executive branch to unilaterally cancel student debt”said Caleb Kruckenberg, an attorney with the Pacific Legal Foundation, a Sacramento, Calif.-based law firm that is representing plaintiff Frank Garrison, who is himself an attorney employed by the group.

A promise amounting to 400 billion dollars

During the campaign for the 2020 presidential election, Mr. Biden, a Democrat, promised that if elected he would take steps to ease the burden of student debt. At the end of August, a few months before the midterm elections where his party was expected to lose seats in Congress, he announced that he would cancel $10,000 per student for people whose income is less than $125,000 a year, or households earning less than $250,000. Those from low-income families should get an additional $10,000 cancellation.

US Secretary of Education Miguel Cardona at the White House, April 27, 2022.

In a report released Monday, the Congressional Budget Office estimated that fulfilling this promise will cost the federal government $400 billion. Republicans are crying foul and conservative lobby groups had threatened to challenge debt cancellation since Mr Biden floated the idea, saying it has no legal basis in the absence of express law from of Congress.

Contested legal grounds

The Biden administration did not immediately comment on the lawsuit, but said the plan has a solid legal basis.

In its legal justification for canceling the debt, the Biden administration invoked the HEROES Act of 2003, which aims to help military personnel. This law gives the administration “considerable authority” to reduce or eliminate student debt during a national emergency, the Justice Department said in a legal notice released in August.

The American of Education, Miguel Cardona, said he had the legal power to cancel the debt of people who faced hardship during the pandemic. According to Mr. Cardona, Mr. Biden’s plan will ensure that borrowers are no worse off after the pandemic than before.

The lawsuit challenges that reasoning, saying the plaintiff, Frank Garrison, and others like him, will see their debt burdens increase as a result of Biden’s plan. She also argues that the plan does not meet the requirements of the 2003 law, arguing that the problem of high student debt is not a “direct result” of the pandemic.

The suit asks the court to void Biden’s plan and temporarily halt him while legal issues are resolved.

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