Lawsuits filed by conservative organizations aim to impede Biden’s student loan initiative

Conservative Groups File Lawsuit to Block Student Loan Forgiveness Plan

Two conservative groups have filed a lawsuit in a federal court seeking to block the Biden administration’s plan to cancel $39 billion in student loans for more than 800,000 borrowers. The lawsuit, filed in Michigan, argues that the administration exceeded its authority when it announced the forgiveness plan in July.

The New Civil Liberties Alliance, on behalf of the Mackinac Center for Public Policy and the Cato Institute, filed the lawsuit. The groups are asking the court to deem the cancellation illegal and prevent the Department of Education from implementing it while the case is being decided.

In response to the lawsuit, the Education Department dismissed it as “a desperate attempt from right-wing special interests to keep hundreds of thousands of borrowers in debt.” The department emphasized its commitment to defending working families and stated that it will not back down.

This legal challenge is part of a series of Republican opposition to the Biden administration’s efforts to reduce or eliminate student debt. President Biden has expressed his intention to pursue an alternative cancellation plan following the Supreme Court’s rejection of a broader proposal. Additionally, the administration is introducing a more generous repayment plan, which opponents criticize as a “backdoor attempt” at cancellation.

The Biden administration’s forgiveness plan, announced on July 14, aims to forgive loans for 804,000 borrowers enrolled in income-driven repayment plans. The plan addresses previous inaccuracies in payment counts that hindered borrowers’ progress toward forgiveness. By counting certain periods of past nonpayment as if payments were made, it moves borrowers closer to the necessary 20- or 25-year mark for cancellation.

The plan also addresses the issue of forbearance steering, in which government-contracted student loan servicers incorrectly push borrowers toward forbearance instead of income-driven repayment plans. The one-time fix includes counting forbearance periods as progress toward Public Service Loan Forgiveness, a program that offers cancellation after 10 years of payments for those working in government or nonprofit positions.

The lawsuit argues that President Biden’s action was illegal because it lacked authorization from Congress and did not undergo the necessary federal rulemaking process, which invites public feedback. The conservative groups claim that the plan undermines Public Service Loan Forgiveness and negatively impacts nonprofit employers who rely on the program. They argue that Biden’s plan accelerates progress toward relief, diminishing the benefits for these employers.

The Cato Institute previously sued the administration over a cancellation plan that was rejected by the Supreme Court. Separately, the Mackinac Center is challenging Biden’s pause on student loan payments, scheduled to end in October.

As this lawsuit proceeds, the fate of the Biden administration’s student loan forgiveness plan remains uncertain. It highlights the ongoing debate surrounding student debt and the differing approaches to address this issue.

Original Story at spectrumlocalnews.com – 2023-08-06 18:51:00