Hooray, a Student Loan Forgiveness Plaintiff A man hurt by Biden’s illegal write-off sues to block it. He has a good case.
The Biden Administration has to know it lacks the authority to unilaterally cancel a half-trillion dollars in student debt, but it may have calculated that no one could demonstrate the injury needed to bring a legal challenge. Well, maybe someone can.
An Indiana borrower on Tuesday filed a federal lawsuit to block the President’s student loan write-off. He makes a strong case that he is harmed by the loan cancellation and that it’s illegal. Federal courts only hear cases and controversies. As a threshold matter, plaintiffs must show that they have suffered a concrete and particular injury.
Individual taxpayers aren’t directly harmed by the write-off, even if they will ultimately bear the cost. The cancellation is unfair to Americans who repaid their loans or didn’t go to college, but they haven’t suffered a concrete injury. Frank Garrison argues he will be harmed owing to quirks in federal loan repayment plans and Indiana tax law.
Mr. Garrison is enrolled in the federal Public Service Loan Forgiveness program, which limits his monthly payments to a share of his income and discharges the remaining debt after 10 years of payments. The President’s loan forgiveness will immediately cancel $20,000 in debt. But this won’t reduce his monthly payments since they are already capped.
However, it will require him to pay more than $1,000 in state tax on the canceled debt this year. Indiana doesn’t tax Public Service Loan Forgiveness, so he wouldn’t face a state tax liability several years from now. Thus he won’t receive an “additional benefit from the cancellation—just a one-time additional penalty,” according to his suit.
He can’t avoid this hit since the Education Department says it will automatically cancel loans for eight million borrowers for which it has income data on file, namely those in income-based repayment plans. Mr. Garrison’s injury is also imminent because the Department said it plans to begin canceling debt for borrowers by early October.
White House legal memos claim the 2003 Higher Education Relief Opportunities for Students (Heroes) Act, which was intended to help veterans, authorizes the Education Secretary to “waive or modify” any statutory or regulatory provision of student aid programs when “necessary in connection with a war or other military operation or national emergency.”
Since Mr. Biden says Covid is a national emergency, the Administration says it can waive the obligation to repay debt. This means there is no limiting principle to the executive’s power to cancel student debt. Mr. Biden could declare climate change a national emergency as a pretext to discharge more debt.
Mr. Garrison’s lawsuit says loan forgiveness also violates the Administrative Procedure Act because the Administration didn’t even attempt to show that its relief is necessary to redress harm caused by the pandemic emergency—perhaps because it can’t. The Department also failed to conduct a formal rule-making, including notice and comment.
The Administration also claims that Congress in the Heroes Act “used the word ‘necessary’ in a more flexible and capacious sense, as meaning ‘appropriate’ or ‘conducive’ rather than ‘essential.’” But as the Supreme Court stressed in West Virginia v. EPA, economically and politically significant actions require clear authorization by Congress.
Mr. Biden’s loan forgiveness is the biggest executive usurpation of Congress in modern history. Credit to the Pacific Legal Foundation for representing Mr. Garrison and the forgotten taxpayers.
Comments are closed.
