- The Pacific Legal Foundation announced Tuesday it was filing a suit against student loan relief.
- The conservative legal organization argues that the president is “usurping” Congress’s power to make laws.
- But the plaintiff’s concern over automatic relief and accompanying tax bills might be tenuous.
The first major lawsuit against President Joe Biden’s student debt relief has rolled in from Indiana.
The Pacific Legal Foundation, a conservative nonprofit legal organization, announced that it had filed suit against Biden’s relief — a development that comes after rumblings from conservative business groups and attorneys general that they would pursue legal action.
Significantly, the Pacific Legal suit has a borrower plaintiff at its core: Frank Garrison, a public interest attorney at the organization who is currently eligible for Public Service Loan Forgiveness (PSFL) and has paid off his debts through that program for the last six years . According to the lawsuitGarrison expects to qualify for complete forgiveness through the program in about four years.
Garrison, who received a Pell Grant, is now eligible for $20,000 in relief through Biden’s forgiveness — and, as Indiana intends to tax student loan relief, will “face a state income tax liability of more than $1,000 for 2022.” The suit argues that automatic relief is causing Garrison to incur a tax bill he would not have gotten otherwise, and that the administration is “usurping” Congress’ law-making power.
“Congress did not authorize the executive branch to unilaterally cancel student debt,” Caleb Kruckenberg, an attorney at the Pacific Legal Foundation, said in a press release. “It’s flagrantly illegal for the executive branch to create a $500 billion program by press release, and without statutory authority or even the basic notice and comment procedure for new regulations.”
The nonpartisan Congressional Budget Office has estimated that, according to projections spanning the next 30 years, student loan relief will cost $400 billion.
The viability of lawsuits blocking the relief has hinged on whether they can find a plaintiff, as the Washington Post reported.
But Luke Herrine, an assistant professor of law at the University of Alabama who focuses on the legality of debt cancellation, told Insider in an email that the plaintiff depends on how the Department of Education rolls out the relief plan, “including whether this borrower qualifies for automatic discharge and if there’s an opt out or not (since if the borrower does not automatically have debt cancelled, he can just avoid the alleged harm).”
The Biden administration has indicated that anyone who wants to opt out relief will be able to.
“The claim is baseless for a simple reason: No one will be forced to get debt relief. Anyone who does not want debt relief can choose to opt out,” Abdullah Hasan, White House assistant press secretary, said in a statement to Insider. “Why would this group bring this baseless claim? Because opponents of the debt relief plan are trying anything they can to stop this program that will provide needed relief to working families.”
There’s also, Herrine said, the “difficult legal question” of how the Indiana tax authority interprets its statute, and whether the relief can even be taxable.
“Those contingencies speak to how viable the suit is. I think: not very,” wrote Herrine. The borrower’s standing to sue is “tenuous” and “contingent,” especially since the alleged harm of the tax burden may not even.
“Borrowers should know that conservatives are hell bent on stopping this popular plan and courts may well go with them, eventually,” Herrine said. But the fact that this is the best case they’ve found so far both indicates how popular the plan is, and how difficult it is to make a legal case against the relief.
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