Student Loan Forgiveness in Jeopardy? Lawsuit To Block Biden’s Program Underway

DC: President Biden and First Lady deliver remarks to celebrate the Americans with Disabilities Act and mark Disability Pride Month, Washington, District of Columbia, USA - 28 Sep 2022

Just when it seemed as if student loan relief could help roughly 43 million Americans, including 20 million who could have their student loan debt completely forgiven, the initiative is facing a major stumbling block: a lawsuit calling the policy “an abuse of executive power.”

According to a report from CNN, nonprofit libertarian law firm Pacific Legal Foundation filed the suit on behalf of Frank Garrison, a lawyer for the firm, in the U.S. District Court for the Southern District of Indiana. The Department of Education is named as the defendant in the suit.

Under the student loan debt cancellation program, Garrison would be “stuck with a tax bill that makes him financially worse off than continuing with his repayment program under the Public Student Loan Forgiveness (PSLF) program,” according to a press release issued by the Pacific Legal Foundation.

There is no way for debtors who qualify under the terms of the loan cancellation program to opt out, according to the press release. The press release notes that “hundreds of thousands of public interest workers and public servants in at least six states will be stuck in a similar situation.”

However, White House spokesperson Abdullah Hasan said in an emailed statement to CNN that, “No one will be forced to get debt relief. Anyone who does not want debt relief can choose to opt out.”

Likewise, during the Sept. 27 White House briefing, press secretary Karine Jean-Pierre said that anyone who doesn’t want student debt relief will be able to opt out, CNN detailed.

Save for Your Future

But it’s not just about personal situations, according to Pacific Legal Foundation. The law firm called the loan forgiveness program an “unacceptable abuse of executive authority,” pointing out that the Department of Education had no authority to cancel student debt under the HEROES Act without Congressional approval.

More From GOBankingRates


See Today's Best
Banking Offers