The following is an excerpt from USA Today.
The Pacific Legal Foundation (PLF) filed a federal lawsuit Tuesday with the intent of putting a stop to the [Biden Administration's] loan cancellation plan.
In addition, the group has filed for a temporary restraining order.
It's the first legal challenge to the administration's executive action.
While most taxpayers don’t have standing to sue the government if they’re displeased with policies or spending, the Pacific Legal Foundation identified a group of taxpayers who will be unfairly hurt by loan forgiveness.
Plus, the firm believes that Biden's executive order is a huge “unlawful” overreach that will cost taxpayers hundreds of billions.
“The whole idea that an administrative agency can just say we are going to enact this kind of what they call transformational policy without any oversight whatsoever is ludicrous,” said Caleb Kruckenberg, an attorney at Pacific Legal Foundation.
The administration’s justification for such unprecedented action is the HEROES Act, which allows for the modification of loans during war or a national emergency.
The plaintiff in the case is Frank Garrison, a public interest attorney (who is now employed by PLF). Garrison lives in Indiana, one of at least six states that tax this kind of debt cancellation as income.
He’s already part of the congressionally approved Public Service Loan Forgiveness program, and would have had his debt forgiven after 10 years of payments – without any additional tax burden. He’s already six years into payments, and those payments are capped based on his income.
Since he’s a Pell Grant recipient, Garrison is eligible for $20,000 in loan forgiveness. Taking that amount off his principal, however, changes nothing for him except for giving him an immediate tax bill of more than $1,000, Kruckenberg said.
So the “forgiveness” will actually cost Garrison money and the action will be automatic – as soon as October – because of his participation in the public service program.
“Congress did not authorize the executive branch to unilaterally cancel student debt,” Kruckenberg said in a statement. “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.”
Hundreds of thousands of other borrowers will find themselves in similar situations.
Other impacted states include Wisconsin, North Carolina, Mississippi, Minnesota, California and Arkansas.
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