Student loan forgiveness faces its first major legal challenge
Image: Education Loan Finance
A public interest lawyer in Indiana filed a federal lawsuit against the Department of Education yesterday in an effort to block its student loan forgiveness plan, marking the policyâs first major legal challenge.
đ Background: Last month, the Biden admin announced it would cancel $10,000 worth of federal student debt per borrower for individuals making less than $125,000 per year, or couples making less than $250,000.
- Borrowers who received federal Pell Grants â which are for college students with âexceptional financial needâ â and who fall under the income levels mentioned above will have $20,000 forgiven.
The plan is projected to cost ~$420 billion over the next 30 years, per new estimates from the nonpartisan Congressional Budget Office published this week.
âď¸ That brings us to yesterdayâs lawsuit⌠which appears to have the one thing legal experts say is necessary for a legitimate case against student loan forgiveness: a client with legal standing to sue.
The plaintiff, Frank Garrison, is an employee of the libertarian Pacific Legal Foundation, which is backing the lawsuit. In it, they assert that the executive branch lacks the authority to bypass Congress and unilaterally forgive student loans, and that Garrison would be harmed by instituting the policy.
- Garrison is currently in the process of having his federal student loans canceled through a program that does so for public servants after 10 years of payments and service.
- Participants in this program donât have to pay any federal or state taxes on the loan forgiveness â but Garrison is arguing Bidenâs forgiveness plan would instead subject him to over $1,000 worth of local taxes for the $20,000 in forgiven debt.
+Bonus: Hereâs everything you need to know about student loan forgiveness â covering applications, key dates, eligibility, and more. (TL;DR: The application wonât be available until âearly October,â per the Biden admin.)
đ Flash poll: Do you agree with President Bidenâs plan to forgive some student loan debt?
See a 360° view of what the media is saying â
Sprinkles from the Left
- Some commentators argue that Bidenâs student loan forgiveness plan represents a sweet spot between the group of people who want all debt forgiven, and those who want no debt to be forgiven.
- Others push back on the characterization that Bidenâs student loan forgiveness plan unfairly ârewards the rich,â noting that it exclusively applies to Americans earning below a certain threshold.
- âWith student loan plan, Biden finds the sweet spot for debt forgivenessâ âPhiladelphia Inquirer Editorial Board
- âAbbott says Bidenâs student loan forgiveness ârewards the rich.â How do you figure?â âHouston Chronicle Editorial Board
- âEveryone Has Opinions About Student-Loan Forgivenessâ âJessica Karl, Bloomberg
Sprinkles from the Right
- Some commentators celebrate the fact that critics of Bidenâs student loan forgiveness plan have finally found a plaintiff, and argue that he has a strong legal case to block the law from being implemented.
- Others contend that Bidenâs student loan forgiveness plan represents an unfair burden for all US taxpayers who didnât go to college, or those that did and didnât end up taking out federal loans.
- âHooray, a Student Loan Forgiveness Plaintiffâ âWSJ Editorial Board
- âStudent loan forgiveness adds up to zero help for taxpayersâ âBoston Herald Editorial Board
- âScams and moral hazards: Real problems with Bidenâs student loan forgivenessâ âChicago Tribune Editorial Board
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