Lawsuit aims to stop Biden’s student loan forgiveness plan

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A public interest lawyer in Indiana is suing to block President Biden’s plan to cancel some student debt, arguing that the policy will force him to pay state taxes on the forgiven amount.

The lawsuit, filed in U.S. District Court for the Southern District of Indiana Tuesday, is the first significant legal action seeking to invalidate Biden’s policy before it takes effect.

The Pacific Legal Foundation, the conservative public interest law firm in California that is backing the new lawsuit, asserts that the executive branch lacks the authority to create a new forgiveness policy and is usurping Congress’s power to make law. Plaintiff Frank Garrison works for the foundation.

CBO: White House plan to cancel student loan debt costs $400 billion

The argument is in line with other objections to Biden’s plan, but the foundation may have the one thing legal experts said was needed to make a legitimate case, a client with the standing to sue.

Garrison said he has been working toward having his federal student loans canceled through a program that erases the debt of public servants after 10 years of payments and service. Participants in that Public Service Loan Forgiveness program do not have to pay federal or state taxes. However, Biden’s plan could result in borrowers in several states, including Indiana, being required to pay local tax bills.

Since Biden’s plan would take effect before Garrison’s debt is forgiven through the public service program, Garrison said he expects to pay more than $1,000 in state income taxes for the $20,000 of forgiven debt.

Republican state attorneys general and lawmakers have been exploring the possibility of a lawsuit against Biden’s forgiveness plan, and the Job Creators Network pledged to sue the administration once the Education Department guidance has been released.

This is a developing story and will be updated.



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