Suit vs. student loan forgive

President Biden’s plan to forgive up to $20,000 in federal student loan debt per borrower was hit with its first major lawsuit Tuesday — just a day after the nonpartisan Congressional Budget Office estimated the bailout would cost taxpayers $400 billion.

The libertarian Pacific Legal Foundation filed the suit in an Indiana federal court on behalf of one of its attorneys, Frank Garrison, who argues that the loan forgiveness would force him to pay a hefty state tax bill.

The lawsuit asks for an injunction halting the executive action, which could affect up to 43 million people beginning next month.

“Nothing about loan cancellation is lawful or appropriate,” the lawsuit says. “In an end-run around Congress, the administration threatens to enact a profound and transformational policy that will have untold economic impacts. The administration’s lawless action should be stopped immediately.”

Garrison “will face immediate tax liability from the state of Indiana because of the automatic cancellation of a portion of his debt,” the 17-page filing adds. “These taxes would not be owed for debt forgiveness under the Congressionally authorized program rewarding public service.”

Biden announced the massive loan forgiveness plan on Aug. 24, outraging critics who argued it was illegal and could worsen inflation, which already is at its highest rate since 1981.

Actual litigation over the bailout has been slow to materialize due to trouble finding someone with legal standing to sue — meaning an argument that shows they are directly harmed by the action and therefore have a right to challenge it. Steven Nelson