The Pacific Legal Foundation (PLF), a national nonprofit legal group which defends Americans from government overreach, has become the first organization to formally challenge the Department of Education's student loan cancellation policy.
PLF, which filed the federal lawsuit Tuesday in the U.S. District Court for the Southern District of Indiana, asserts that President Joe Biden's $400 billion executive order to cancel student loan debt for a percentage of borrowers has no constitutional backing, since Congress did not approve Biden's ruling.
"It's flagrantly illegal for the executive branch to create a ... program by press release," PLF attorney Caleb Kruckenberg said in a statement. "And without statutory authority or even the basic notice and comment procedure for new regulations."
In August, the Biden administration announced it would cancel up to $10,000 in student-loan debt for borrowers making less than $125,000 per year, or $250,000 for married couples.
Also, the lower-income borrowers from the Pell Grant relief program reportedly could have as much as $20,000 on student loan debt forgiven.
The Education Department estimates loan forgiveness could impact 8 million borrowers automatically, while others would need to apply for forgiveness.
As Newsmax chronicled last month, the White House said the forgiveness program would combat the "skyrocketing cumulative federal student loan debt — $1.6 trillion and rising for more than 45 million borrowers — is a significant burden on America's middle class."
As a possible legal precedent for President Biden's pronouncement, the White House cites the Higher Education Relief Opportunities for Students, or Heroes Act of 2003, which empowers the Education Department to waive or modify "statutes or provisions related to student financial assistance programs during war or national emergencies."
However, opposing challenges might point to the United States not being at war with any other country at this time; and last week, while participating in an extended interview with CBS's "60 Minutes," President Biden publicly declared the COVID-19 pandemic to be "over."
The PLF lawsuit was filed on behalf of PLF lawyer Frank Garrison.
As part of his argument, Garrison — who's reportedly paying off federal student loans through the Public Service Loan Forgiveness program — says Pell Grant eligibility would wipe out his entire college debt.
However, Garrison estimates that he would subsequently encounter a state income liability tax of around $1,000, if the Education Department's student-loan forgiveness program garnered approval.
Garrison's rationale meshes with Indiana state law, which treats debt-cancellation measures as "income" and thus taxes it, according to the Indy Star.
The PLF's initial goal, according to reports: Get an approved injunction on the cancellation policy, and prohibit the White House from taking additional steps with President Biden's order.
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