Biden faces similar issues with various student loan plans.
The Biden Administration Faces Another Lawsuit Over Student Loan Forgiveness Plans
The Biden administration is once again in the midst of a legal battle over its student loan forgiveness plans. After the Supreme Court struck down its $430 billion cancellation policy, President Joe Biden announced a smaller plan that would impact 800,000 borrowers at a cost of $39 billion. However, this plan has also been hit with legal challenges.
“The one-time account adjustment is substantively and procedurally unlawful,” reads the suit, filed on behalf of the Cato Institute and the Mackinac Center for Public Policy. “The court should declare this forbearance-credit scheme unlawful, set it aside, and enjoin any cancellation of student loans based on it.”
The White House argues that its latest plan is an “adjustment” to existing federal programs aimed at correcting past mistakes and providing $39 billion in loan forgiveness. They also suggest that more borrowers could become eligible in the future.
“President Biden continues to fight for student loan borrowers on all fronts,” a White House official stated.
However, the lawsuit claims that the plan was created without following the required notice and comment period, instead being announced through a press release. It also alleges that the plan violates the apportionment clause of the Constitution by bypassing Congress. These were similar complaints made against the original plan.
“The president and the Department of Education do not have authority to unilaterally change the terms of student loans in order to cancel them,” said Neal McCluskey, the director of the Cato Institute’s Center for Education Reform. “This is the executive branch essentially making law by changing what Congress created.”
If successful, the lawsuit would halt the smaller program, just as previous lawsuits stopped the larger one. McCluskey argues that changes to federal student loan programs must be made by Congress, acknowledging that there are legitimate issues with loan accounting errors but stating that the program goes beyond that by partially forgiving hundreds of thousands of student loans that will ultimately go unpaid.
According to the lawsuit, the program could potentially impact over 3.5 million borrowers, with a price tag of $175 billion.
“Taxpayers are the ones who have to make up for the lost revenue,” McCluskey added. “You’re hurting somebody in order to try and benefit somebody else.”
Despite the lawsuit, the Biden administration is moving forward with the program and is already accepting applications from borrowers hoping to have their loans forgiven.
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