Two Lawsuits Filed Against Administration’s Student Loan Forgiveness Plan

After the president announced an unprecedented student loan forgiveness plan last month, many speculators questioned the program’s constitutionality and wondered whether or not the plan will end up in federal court.

Earlier this week, the first lawsuit was filed against the administration’s cancellation plan.

Now, several states including Nebraska, Missouri, Arkansas, Kansas, Iowa and South Carolina have banded together to file a second lawsuit to stop the loan forgiveness program from taking effect.

It seems highly likely that the legality of the plan will be decided by federal courts, and potentially by the U.S. Supreme Court.

Under the plan, the Department of Education will forgive up to $20,000 in student debt for 40 million borrowers – a program that could cost at least $400 billion.

The Pacific Legal Foundation (PLF) filed the first lawsuit on behalf of Frank Garrison, who charges that he will be harmed if his loans are forgiven.

Garrison is in the process of having his loans forgiven under the Congressionally authorized Public Service Loan Forgiveness program. He lives in Indiana, where under state law he will not be taxed if his loans are forgiven under the PSLF program. However, he will owe state income taxes if his loans are forgiven under the new forgiveness plan.

“The entire program is brazenly illegal from top to bottom,” said Michael Poon, an attorney at PLF. “At no point has the government made a plausible argument that the underlying policy is legal. So far, they have not challenged our argument that the administration’s ‘lawmaking by press release’ is unconstitutional.”

PLF filed the lawsuit in the U.S. District Court for the Southern District of Indiana and asked the court for a temporary restraining order to prevent the plan from going into effect.

On September 29, the court denied PLF’s request for the order, but according to PLF, “the case continues as we amend our complaint and continue to challenge this flagrantly illegal abuse of executive power.”

The lawsuit filed by the states alleges that by choosing to unilaterally cancel hundreds of billions of dollars of student loan debt without the approval of Congress, the president:

Violated federal law.
Violated the constitutional principle of separation of powers.
Violated the Administrative Procedures Act.

Arkansas Attorney General Leslie Rutledge, in a statement, said that the administration’s “unlawful political play puts the self-wrought college-loan debt on the backs of millions of hardworking Americans who are struggling to pay their utility bills and home loans in the midst of inflation.”

The president “does not have the power to arbitrarily erase the college debt of adults who chose to take out those loans,” the attorney general added.

In the filing, the states ask the court to issue a judgement that “Mass Debt Cancellation violates the separation of powers established by the U.S. Constitution” and to “temporarily restrain and preliminarily and permanently enjoin implementation” of the debt cancellation plan.

The Daily Citizen will keep you apprised of any important developments in these cases.

The cases are Garrison v. U.S. Department of Education and Nebraska v. Joseph R. Biden, Jr.

To learn more about our nation’s $1.7 student loan crisis, click here.

Related articles and resources:

Calls for Student Loan Cancellation Grow. I Paid Off My Debt – Where’s My Refund?

Are You Paying Off Student Loans? Here’s Advice from a Ramsey Solutions Personality.

New Documentary ‘Borrowed Future’ Exposes Student Loan Crisis

Photo from Reuters.