‘Flagrantly Illegal’: Lawsuit Hits Biden Over Student Debt Cancellation

 The Pacific Legal Foundation filed suit on Tuesday against the Biden administration for its policy to cancel up to $10,000 in student debt for millions of borrowers.

The group argued in a complaint that President Joe Biden’s use of the HEROES Act, a 2003 law meant to aid Iraq War veterans and their families, as justification for the move occurred with “breathtaking informality and opacity.” Frank Garrison, a public defense attorney at the Pacific Legal Foundation and the plaintiff in the lawsuit, will personally face a tax liability from the state of Indiana due to the cancellation of his debt.

“Congress did not authorize the executive branch to unilaterally cancel student debt,” Pacific Legal Foundation attorney Caleb 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.”

The student loan cancellation plan applies to individuals earning less than $125,000 annually. Biden also decided to extend the pause on federal student loan repayment to January 2023 and will permit borrowers with undergraduate loans to cap payments at 5% of monthly income.

The complaint added that the Department of Education failed to comply with the “notice-and-comment process required for rulemaking” when charting the debt cancellation policy and did not “solicit any public input.”

“Cancelling student debt is unjust to those who have paid their loans or never took any. It will only lead to more calls for government intervention in education at taxpayers’ expense,” Pacific Legal Foundation senior attorney Steve Simpson added. “Loan cancellation will make Americans more divided, as those who paid their loans — or never went to college — will have good reason to think that we no longer have a government of, by, and for the people.”

Indeed, one-third of student debt is held by the wealthiest 20% of households, according to data from the Brookings Institution. In comparison, only 8% is owed by the bottom 20% — largely because graduate degrees are often necessary for high-paying professions.

Eliminating $10,000 of student loans per borrower will cost $298 billion in 2022 and a total of $329 billion by 2031 if the policy is renewed each year, according to a nonpartisan analysis from the University of Pennsylvania’s Wharton School, which also found that 42% of the benefit would impact Americans earning more than $82,400 per year. Another estimate from the Congressional Budget Office forecasts that the overall cost will be $400 billion, with another $20 billion incurred by the extended pause on repayments.

The Wharton analysts said that a permanent loan cancellation announcement could prompt students to “eventually reorganize their financing toward additional borrowing.” Although the policy could increase access to higher education, universities themselves could capture the value “in the form of higher prices” as they raise tuition.

The Pacific Legal Foundation contended that the student loan cancellation is an “election year ploy” — marking the most severe abuse of power since former President Donald Trump imposed a nationwide eviction moratorium ahead of the 2020 election through the Centers for Disease Control and Prevention. The agency claimed that “eviction moratoria — like quarantine, isolation, and social distancing — can be an effective public health measure utilized to prevent the spread of communicable disease.”