Conservative groups sue to block Biden plan canceling $39 billion in student loans

Two conservative groups are asking a federal court to block the Biden administration’s plan to cancel $39 billion in student loans for borrowers who owe more than 800,000 dollars.

The Biden administration faced criticism from various groups in Michigan on Friday as they filed a lawsuit, arguing that the Supreme Court overstepped its power when it struck down a broader plan for student loan cancellation that President Joe Biden had announced just weeks before in July.

The New Civil Liberties Alliance filed the lawsuit on behalf of the Mackinac Center for Public Policy and the Cato Institute. They are requesting a judge to declare the cancellation unlawful and prevent the Education Department from implementing it until the case is resolved.

The Department of Education, also known as “the suit,” attempts to keep special interest rates for borrowers in the thousands of hundreds of debt.

“The department stated, “We will not retreat or concede anything when it comes to safeguarding working households.””

Republicans have leveled legal challenges as part of a wave of opposition to the Biden administration’s efforts to eliminate or reduce millions of dollars in student debt. President Biden has stated that he will pursue a different cancellation plan after the Supreme Court’s decision, calling opponents’ claims of a “backdoor attempt” at cancellation a generous repayment plan unrolling under his administration.

The department stated that “previous administrative shortcomings” led to incorrect payment tallies, which hindered borrowers in their journey towards loan forgiveness. However, these plans have always provided the option of cancellation after borrowers have made payments for either 20 or 25 years. On July 14, the Biden administration declared its intention to forgive loans for 804,000 borrowers who are currently enrolled in income-driven repayment plans.

The new measure, referred to as a “one-time adjustment,” helped move 804,000 borrowers beyond the 20- or 25-year milestone required for loan cancellation. Additionally, it impacted millions of other individuals who were nearing that threshold. This adjustment considers specific periods of previous nonpayment as if borrowers had been consistently making payments during that time.

If borrowers were to enroll in one of the income-driven repayment plans, they would have been served by the government, which hired student loan servicers to address a known practice of pushing them into forbearance, even if they were experiencing temporary hardship and needed to pause their payments.

The Forgiveness Loan Service program offers cancellation after 10 years of making payments while working in a nonprofit or government job. It also counts progress towards Public Service Loan Forgiveness, even during past periods of forbearance.

According to the lawsuit, Biden’s action was deemed unlawful as it was not sanctioned by Congress and did not undergo a federal rulemaking procedure that encourages public input.

The lawsuit states that the Department allows non-payments to be counted as payments. The press release adds that neither the exorbitant price tag nor the identified legal policy of the authority is considered.

The Mackinac Center and Cato Institute argue that Biden’s actions unlawfully expedite progress towards relief, reducing the advantage for nonprofit employers. They claim to hire borrowers who are striving for student loan cancellation through the program. The conservative organizations assert that Biden’s plan undermines Public Service Loan Forgiveness.