Acting to stop Biden’s student loan debt forgiveness plan, The Pacific Legal Foundation, an activist group that files lawsuits in support of libertarian and conservative causes, filed suit on Tuesday.
Arguing against the plan, which is called “flagrantly illegal,” the PLF said, in its complaint, that Congress is the branch that should be making the law if there is to be a massive change to the student loan debt program and that the change in policy was made with “breathtaking informality and opacity,” which is improper for such a large regulatory change. In PLF’s words:
Student debt cancellation has been the subject of great debate in America for at least a decade. Some argue that the government should provide relief to students to offset skyrocketing tuition costs and the consequent debt incurred by many to attend college. Others point to the regressive quality of student debt relief, arguing that it is unfair to cancel student debts that were freely assumed with taxes raised from those who predominately have not attended college, or attended but avoided debt, or paid it off. Congress has authorized a variety of student debt relief programs, including the Public Service Loan Forgiveness program, by which some debt is written off for students who choose to work in relatively lower-paying public service or non-profit organization positions after graduation and follow program rules for a period of years. Perhaps because of the costs of student loan cancellation, or its potential impact on the economy, or the inherently divisive nature of this debate, Congress has declined to enact more sweeping debt cancellation. This is, of course, Congress’s prerogative under our Constitution, as Congress is the branch of government that possesses the exclusive power to make law.
Purporting to step into the breach left by Congress, and making good on a campaign promise, the President in August announced that his administration would, by October, begin canceling between $10,000 and $20,000 of loan debts categorically—without respect to hardship or Congressionally authorized program rules—for more than 40 million borrowers. The authority for this $500 billion write-off, according to the administration, can be found in a 2003 law passed in response to the Iraq war as a means of aiding veterans and their families. This law—the Higher Education Relief Opportunities for Students or “HEROES” Act—authorizes the Secretary of Education to “waive or modify any statutory or regulatory provision applicable to” student aid programs when “necessary in connection with a war or other military operation or national emergency.” 20 U.S.C. § 1098bb(a)(1). Importantly, to qualify for such a waiver or modification, individuals must reside or be employed in a “disaster area” as declared by a “Federal, State, or local official in connection with a national emergency.” Concluding that the entire nation is a “disaster area” because of the COVID pandemic, the administration claims that the Secretary of Education has the power to “automatically” issue blanket loan forgiveness to 8 million borrowers in the first week of October.
Despite the staggering scope of this regulatory action, it was taken with breathtaking informality and opacity. The Department did not undertake the notice-and-comment process required for rulemaking, much less solicit any public input. It did not even issue a formal order or directive setting out its cancellation program. Instead, it issued a press release on August 12th along with two legal memoranda providing its justifications, and, later, a hastily created a FAQ section on its website.
Concluding the introduction, where the main arguments of the suit are laid out, the PLF went on to note why the plaintiff in the case will be worse off as a result of the policy change (and so has standing to sue) and demanding that the action is “lawless” and “should be stopped immediately”.
In the rush, the administration has created new problems for borrowers in at least six states that tax loan cancellation as income. People like Plaintiff Frank Garrison will actually be worse off because of the cancellation. Indeed, Mr. Garrison will face immediate tax liability from the state of Indiana because of the automatic cancellation of a portion of his debt. These taxes would not be owed for debt forgiveness under the Congressionally authorized program rewarding public service. Mr. Garrison and millions of others similarly situated in the six relevant states will receive no additional benefit from the cancellation—just a one-time additional penalty.
Nothing about loan cancellation is lawful or appropriate. In an end-run around Congress, the administration threatens to enact a profound and transformational policy that will have untold economic impacts. The administration’s lawless action should be stopped immediately.
And it’s not just notice and comment failures that are the problems with the new student loan debt plan. The Daily Wire quotes Pacific Legal Foundation senior attorney Steve Simpson as adding that:
“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. 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.”
By: Gen Z Conservative