A federal judge in Indiana on Thursday denied a legal challenge by the libertarian Pacific Legal Foundation against President Joe Biden's student debt forgiveness plan, reports The Hill.
PLF on Tuesday challenged Biden's plan, alleging that plaintiff Frank Garrison "will face immediate tax liability from the state of Indiana because of the automatic cancellation of a portion of his debt."
Garrison is a public interest attorney and an employee of PLF.
"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," the lawsuit reads.
U.S. District Court Judge Richard Young on Thursday denied the motion after the White House scaled back its program over concerns about legal challenges from the student loan industry and a new lawsuit from Republican-led states.
The Education Department will now no longer allow borrowers who have federal student loans that are owned by private entities to qualify for the relief program.
Previously, the administration said those borrowers would have a path to receive up to $10,000 or $20,000 in loan forgiveness.
"If you would like to opt out of debt relief for any reason, including because you are concerned about a state tax liability, you will be given an opportunity to opt out," the department's website reads after Wednesday's update.
PLF promised to continue challenging the plan.
"None of these on-the-fly changes can remedy the fact that the entire program is brazenly illegal from top to bottom," said PLF attorney Michael Poon. "At no point has the government made a plausible argument that the underlying policy is legal. So far, they have not challenged our argument that the administration's 'lawmaking by press release' is unconstitutional."
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