Two groups sued the Biden administration this week over its plan to forgive up to $39 billion in student loan debt for about 804,000 people.
The suit by the Cato Institute and Mackinac Center — filed on their behalf by the New Civil Liberties Alliance in federal court in Michigan — argues that the federal government doesn’t have the authority to forgive this debt and that the government is working on an accelerated schedule “to evade judicial review.”
“Before the ink dried on the Supreme Court’s June 30 decision striking down a $430 billion student-loan cancellation program … the (Education) Department announced a host of equally unlawful loan cancellation schemes,” the groups’ lawsuit reads. The suit targets Education Secretary Miguel Cardona and the head of the Federal Student Aid office, Richard Cordray.
The Education Department said last month that it was adjusting how it calculates student loan payments, in a move to correct past errors, which would result in about 804,000 people having the balance of their loans erased over the next few months. The outstanding debt is what’s left of these borrowers’ loans after the equivalent of 20 to 25 years’ worth of payments.
$39 billion in debt to be erased:New round of student loan debt forgiveness will erase balances for over 800,000 people
A longstanding option for student loan borrowers has been to enroll in a payment plan that aligns payments with their income – so called income-driven repayment plans. Some people with those plans, however, have struggled to get credit for all of those payments. Others who were eligible never participated.
The borrowers involved in the plans targeted for the new forgiveness include those with Direct Loans or Federal Family Education Loans held by the department, including Parent PLUS loans.
The lawsuit alleges that the federal government could forgive up to 2.8 million additional borrowers under what it called “the same illegal forbearance-credit scheme.” The lawsuit says that could ultimately cost taxpayers $175 billion and that the Education Department failed to invoke proper policymaking procedures to grant the forgiveness.
It could be a long waitfor Biden’s new plan for mass student loan forgiveness to become reality.
