Two conservative groups have filed a lawsuit in federal court to block the Biden administration’s plan to cancel $39 billion in student loans for over 800,000 borrowers.
The lawsuit, filed in Michigan, argues that the administration exceeded its power when it announced the loan forgiveness in July, shortly after the Supreme Court rejected a broader cancellation plan proposed by President Joe Biden.
The conservative groups are asking the court to deem the cancellation unlawful and halt the Education Department from carrying it out while the case is under review. The lawsuit was filed by the New Civil Liberties Alliance on behalf of the Mackinac Center for Public Policy and the Cato Institute.
The Education Department has described the lawsuit as a “desperate attempt from right-wing special interests to keep hundreds of thousands of borrowers in debt.”
Republicans have launched a series of legal challenges against the Biden administration’s efforts to reduce or eliminate student debt for millions of Americans. Biden has stated that he will pursue an alternative cancellation plan after the Supreme Court’s decision. Additionally, his administration is introducing a more generous repayment plan that opponents criticize as a “backdoor attempt” at cancellation.
In July, the Biden administration announced a plan to forgive loans for 804,000 borrowers enrolled in income-driven repayment plans. Previous administrative errors resulted in incorrect payment counts, hindering borrowers’ progress towards forgiveness. The plan aimed to address this issue by counting certain periods of past nonpayment as if borrowers had been making payments during that time.
The lawsuit argues that Biden’s action was illegal because it was not authorized by Congress and did not go through a federal rulemaking process, which allows for public feedback. The conservative groups claim that Biden’s plan undermines Public Service Loan Forgiveness, affecting borrowers working towards student loan cancellation through the program.
Both the Cato Institute and the Mackinac Center have previously challenged the Biden administration on other student loan policies.
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