First lawsuit is filed challenging Biden's costly, unfair student loan forgiveness plan

Plenty of people aren’t thrilled with President Joe Biden’s student loan cancellation bonanza, a group that likely includes the majority of Americans who don't have a college degree or who have dutifully paid off their loans.

Yet, unlike other recent challenges to the Biden administration’s executive overreach during the pandemic, it was not clear who had legal standing to sue over the president’s unilateral action.

Until now.

The Pacific Legal Foundation (PLF) filed a federal lawsuit Tuesday with the intent of putting a stop to the loan cancellation plan. In addition, the group has filed for a temporary restraining order. It's the first legal challenge to the administration's executive action.

Loan forgiveness hurts some taxpayers

While most taxpayers don’t have standing to sue the government if they’re displeased with policies or spending, the Pacific Legal Foundation identified a group of taxpayers who will be unfairly hurt by loan forgiveness. Plus, the firm believes that Biden's executive order is a huge “unlawful” overreach that will cost taxpayers hundreds of billions.

“The whole idea that an administrative agency can just say we are going to enact this kind of what they call transformational policy without any oversight whatsoever is ludicrous,” Caleb Kruckenberg, an attorney at Pacific Legal Foundation, told me.

After much wavering and delays, Biden in late August announced his plan to cancel up to $20,000 in student loan debt per person, affecting more than 40 million Americans. He also decided to extend a repayment pause until the end of the year – conveniently ending after the midterm elections.

The administration’s justification for such unprecedented action is the HEROES Act, which allows for the modification of loans during war or a national emergency. Thanks to Biden, we’re still in national and public health emergencies over COVID-19.

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The plaintiff in the case is Frank Garrison, a public interest attorney (who is now employed by PLF). Garrison lives in Indiana, one of at least six states that tax this kind of debt cancellation as income. He’s already part of the congressionally approved Public Service Loan Forgiveness program, and would have had his debt forgiven after 10 years of payments – without any additional tax burden. He’s already six years into payments, and those payments are capped based on his income.

Since he’s a Pell Grant recipient, Garrison is eligible for $20,000 in loan forgiveness. Taking that amount off his principal, however, changes nothing for him except for giving him an immediate tax bill of more than $1,000, Kruckenberg said.

So the “forgiveness” will actually cost Garrison money and the action will be automatic – as soon as October – because of his participation in the public service program.

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“Congress did not authorize the executive branch to unilaterally cancel student debt,” Kruckenberg said in a statement. “It’s flagrantly illegal for the executive branch to create a $500 billion program by press release, and without statutory authority or even the basic notice and comment procedure for new regulations.”

Hundreds of thousands of other borrowers will find themselves in similar situations. Other impacted states include Wisconsin, North Carolina, Mississippi, Minnesota, California and Arkansas.

Estimated cost to taxpayers skyrockets

This week, the Congressional Budget Office estimated the cost of the “forgiveness” for up to $20,000 of debt per borrower at $420 billion over three decades – much higher than was initially predicted. And those costs balloon even more when factoring in the Biden administration’s income-driven repayment policy.

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“This is why the Framers designed the Constitution as they did,” the Pacific Legal Foundation states in a press release. “The separation of powers ensures that no department of government can make unilateral decisions, and that laws come from the body that represents the people: Congress. Even when Congress does the wrong thing, the lawmaking process ensures that the people’s voices are heard. Ramming expensive and divisive programs down the throats of Americans through executive fiat is never a good idea.”

Ingrid Jacques is a columnist at USA TODAY. Contact her at ijacques@usatoday.com or on Twitter: @Ingrid_Jacques 

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This article originally appeared on USA TODAY: Lawsuit may block Biden's power play on cancelling student loan debt