Suit challenges Biden's student loan forgiveness plan
President Joe Biden 's plan to forgive hundreds of billions of dollars in student loan debt is facing its first serious legal challenge alleging it violates federal law and the Constitution, according to a lawsuit filed by the Pacific Legal Foundation on Tuesday.
The PLF, a libertarian law firm, is asking a judge in the District Court for the Southern District of Indiana to place a temporary restraining order on the Biden administration's plan, which seeks to cancel up to $20,000 in student loan debt per person for more than 40 million borrowers.
The law group claims to have identified a group of taxpayers who will be unfairly harmed by the loan forgiveness plan, including one named Frank Garrison, an employee of PLF and a resident of Indiana, which is one of at least six states that tax this type of debt cancellation as income.
BIDEN STUDENT LOAN FORGIVENESS WILL COST $400 BILLION OVER 10 YEARS, CBO ESTIMATES
Garrison is already part of the congressionally approved Public Service Loan Forgiveness program and would have his debt forgiven after 10 years of payments without any additional tax expenses. He is already six years into payments and said payments are capped based on his income, according to court records.
Because Garrison is a Pell Grant recipient, he is eligible for $20,000 in loan forgiveness. But removing the amount of his principal debt would alter nothing for his situation except for giving him a tax bill of more than $1,000, according to Caleb Kruckenberg, an attorney for PLF.
Through his participation in the public service program, the so-called "forgiveness" plan would actually make Garrison owe money as soon as October, PLF argues.
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Whether the suit is the right one to challenge the loan forgiveness program is to be determined. A taxpayer's suit may be a better vehicle since the debt will have to be paid from tax revenues.
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