Lawsuit seeks to block Biden's student debt forgiveness program

Bonnie Cash

WASHINGTON — An Indiana-based lawyer who works for a conservative-leaning law firm sued the federal government Tuesday to block President Joe Biden's federal student loan forgiveness program in its first major legal challenge.

Garrison's employer, the Pacific Legal Foundation, filed a 26-page complaint on his behalf in U.S. District Court for Southern Indiana against the Education Department and Education Secretary Miguel Cardona.

The firm's lawyers argue that the administration's plan — announced by Biden in August and set to take effect this fall — violates the Constitution and federal law, partly because it circumvents Congress, which they said has the power to create laws related to student loan forgiveness.

"The Department did not undertake the notice-and-comment process required for rulemaking, much less solicit any public input," the suit says. "It did not even issue a formal order or directive setting out its cancellation program."

The complaint says the Education Department has "no lawful authority to issue the rule," and it rejects the administration's justification for the program: that the mass cancellation of federal student loans is needed to mitigate the effect of the coronavirus pandemic.

"Nothing about loan cancellation is lawful or appropriate," the firm's lawyers argue. "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."

In addition, they argue that people like Garrison "will actually be worse off because of the cancellation" of student debt. Garrison, specifically, has been seeking to have his loans relieved through the Public Service Loan Forgiveness program, which can cancel debt for people who are employed by a federal, state, local or tribal government or a not-for-profit organization.

But, the suit says, as a result of the administration's student loan forgiveness plan, Garrison and others in similar positions could be subject to state income tax liability.

"Under Indiana law, when Mr. Garrison receives $20,000 in automatic cancellation of his federal student loan debt, he will face a state income tax liability of more than $1,000 for 2022," the lawsuit says. "Mr. Garrison would not incur that state tax liability if not for the Department’s automatic cancellation of a portion of his federal student loan debt."

The White House sought to dismiss the legal challenge Tuesday, saying people who are against the loan relief program are trying to do anything to block it.

"Opponents of the Biden-Harris administration’s student loan plans are trying to stop it because it will provide much needed relief for working families. Anyone who doesn’t want to get that debt relief can opt out," White House press secretary Karine Jean-Pierre said at the daily briefing.

The nonpartisan Congressional Budget Office predicted Monday that the plan will cost the federal government $400 billion, more than what the White House had estimated.

Garrison is seeking to nullify the student loan forgiveness program from taking effect, as well as an award for attorneys' fees and costs to him and "any other relief as the Court deems just, equitable and proper."

This article was originally published on NBCNews.com