Conservative groups sue to block Biden plan canceling $39 billion in student loans

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Two conservative organizations have initiated legal proceedings in a federal court to halt the Biden administration’s scheme to write off $39 billion in student debt for over 800,000 individuals who borrowed money.

The lawsuit, which was filed in Michigan on Friday, contends that the administration transgressed its legal limits by announcing this forgiveness in July, a short time after the Supreme Court nullified a more expansive cancellation strategy endorsed by President Biden.

The legal complaint urges a judge to declare the cancellation unlawful and prevent the Education Department from implementing it while the lawsuit is under review. The New Civil Liberties Alliance filed the suit on behalf of the Mackinac Center for Public Policy and the Cato Institute.

According to the Education Department, the lawsuit is nothing but a desperate measure by right-wing groups to continue burdening hundreds of thousands of borrowers with debt. In a statement, the department vowed not to yield or compromise in its defense of working-class families.

A part of a series of legal objections that Republicans have raised against the Biden administration’s strategies to minimize or erase student loans for millions of Americans, this case emerges as a major concern. Following the Supreme Court’s ruling, Biden has declared his intent to pursue an alternative cancellation strategy, alongside a more liberal repayment plan that critics label as a covert cancellation attempt.

On July 14, the Biden administration unveiled that it would soon erase debts for 804,000 borrowers enrolled in repayment plans linked to their income. Although these plans have traditionally allowed forgiveness after 20 or 25 years of payments, previous administrative errors had caused incorrect payment calculations, delaying borrowers’ progress toward cancellation.

The recent action, described as a “one-time adjustment,” considered specific past non-payment periods as if payments were made, thus moving 804,000 borrowers beyond the required 20 or 25 years for cancellation and bringing millions closer to that point.

The one-time fix also considered past forbearance periods as progress toward Public Service Loan Forgiveness, which offers cancellation after 10 years of payments for those working in government or nonprofit roles.

The lawsuit declares Biden’s action illegal, stating that it lacked congressional authorization and failed to follow the federal rulemaking process that requires public input.

Furthermore, the conservative organizations argue that Biden’s approach undermines Public Service Loan Forgiveness. Both the Mackinac Center and the Cato Institute, who employ borrowers aiming for student loan forgiveness through this program, assert that Biden’s action unlawfully hastens progress toward relief, thus diminishing the advantages for nonprofit employers.

The lawsuit accuses, “This unlawful reduction in the PSLF service requirement injures public service employers that rely on PSLF to recruit and retain college-educated employees.”

Additionally, the Cato Institute has previously sued the administration over another cancellation plan, and the Mackinac Center is independently challenging Biden’s temporary halt on student loan payments, which is set to conclude this fall, with payments recommencing on October 1.

The educational reporting team at The Big Big News gets backing from the Carnegie Corporation of New York, but the AP retains full responsibility for the content.

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