Small business group files lawsuit against Biden’s student loan plan
Elaine Parker, president of the Job Creators Network Foundation, called the program an executive overreach and complained that it did nothing to address the root cause of the growing debt: “the outrageous increase in tuition that exceeds inflation every year”.
“This bailout is going to affect everyone in this country because of the massive size of the program,” she said. “And everyone should have the opportunity to give their views to the government.” She added: “These universities must be held accountable for this student debt crisis.”
The Job Creators Network Foundation has already turned to the courts to try to block the Biden administration’s COVID-19 vaccination mandate on corporations. He also sued Major League Baseball in 2021 for moving the All-Star Game from Atlanta over objections to Georgia election law changes. That lawsuit, which cited losses for local businesses, was later dropped.
The new lawsuit is part of a growing number of legal challenges aimed at stopping President Biden’s proposal in late August to forgive up to $20,000 in debt for certain borrowers.
Six Republican-led states filed a lawsuit late last month accusing the Biden administration of overstepping its executive powers, as did the Pacific Legal Foundation, a Sacramento, California-based legal advocacy group. Their lawsuit, filed in federal court in Indiana, calls the plan an illegal overspending that would increase the state tax burden on some Americans who would get their debt forgiven.
Meanwhile, a federal judge in Wisconsin last week dismissed a lawsuit by a local taxpayer group, the Brown County Taxpayers Association, seeking to block the program, ruling that the group lacked standing to sue. legal action. The group had argued that Biden’s order illegally circumvented Congress’s spending power and said the plan was discriminatory because it sought to provide special relief to borrowers of color.
The latest lawsuit, filed in U.S. District Court for the Northern District of Texas against the U.S. Department of Education and its secretary, Miguel Cardona, challenges how the plan was developed. He alleges that the Biden administration violated the notice and comment procedures of the Administrative Procedure Act. He also challenges the administration’s legal justification for the program.
The lawsuit includes two plaintiffs: one who is not eligible for debt forgiveness because the plan excludes loans held by companies that are not in default, and one who did not receive a Pell grant and therefore has entitled to less debt forgiveness under the plan.
“Behind closed doors, the Department has enacted a new debt forgiveness program that will affect tens of millions of Americans and cost hundreds of billions of dollars,” the lawsuit states. “Instead of providing advice and soliciting public comment, the Department hammered out critical details of the program in secrecy and with a view to securing debt cancellation in time for the November election.
It also alleges that the department “made numerous arbitrary decisions regarding the program, including which people will receive debt forgiveness, how much of their debt will be forgiven, and what types of debt will be eligible for the program.”
“The result of this arbitrariness is predictable: some will benefit generously, some will be harmed and others will be left entirely aside”, can we read.
The case went to U.S. District Judge Reed O’Connor, who notably ruled in 2018 that the Affordable Care Act was unconstitutional. The Supreme Court overturned that decision last year. O’Connor, an appointee of former President George W. Bush, has also ruled against other policies pursued by Democratic administrations. Last month, he ruled that an ACA provision that required coverage for an HIV prevention drug violated a Texas employer’s religious beliefs.
Civil suits filed in federal court in Fort Worth have a 90% chance of going to either O’Connor or former President Donald Trump-appointed Judge Mark Pittman, according to a 2020 court order.
White House spokesman Abdullah Hasan responded with a statement defending the loan forgiveness program.
“While opponents of our plan side with special interests and do their best to keep millions of middle-class Americans in debt, the President and his administration are fighting to give middle-class families a legal mean some respite as they recover from the pandemic and prepare to resume loan repayments in January,” he said in a statement.
The Biden Debt Cancellation Program will cancel $10,000 in student loan debt for people earning less than $125,000 a year or households earning less than $250,000. Pell grant recipients, who generally demonstrate greater financial need, will be eligible for an additional $10,000.
The Biden administration used a law passed after the September 11, 2001, terrorist attacks as a legal justification for the program. The law gives the administration “absolute authority” to reduce or eliminate student debt during a national emergency, the Justice Department said in an August legal opinion. The administration cited the COVID-19 pandemic as its emergency.
The Congressional Budget Office estimates the program will cost taxpayers $400 billion over the next three decades.