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Lawsuits Piling Up Over Biden’s Debt Cancellation Ploy

AMAC Exclusive – By Tom Campbell

On Monday, President Joe Biden formally opened the application for his plan to unilaterally cancel $400 billion of student-loan debt by executive fiat. But even as the administration plows ahead with the plan, it has run into a mountain of legal obstacles, raising the distinct possibility that the scheme – viewed by many as a desperate ploy to energize turnout for Democrats ahead of November’s midterm elections – may ultimately backfire and become just the latest embarrassing failure for the beleaguered president.

The first lawsuit filed against the plan came from the Pacific Legal Foundation (PLF), which argued that Biden’s cancellation of student debt is a violation of the Constitution’s separation of powers. The group specifically targeted Biden’s use of the HEROES Act to justify the mass debt cancellation.

The HEROES Act, which Congress passed in the wake of 9/11, gave the Secretary of Education the ability to “waive or modify” student loans held by deployed military service members or victims of certain disasters. The Biden administration argued that the COVID-19 pandemic made all student loan borrowers covered under the law – a notion that PLF disputes, with their lawsuit pointing out that the current Congress has declined to pass wide-scale debt cancellation. As PLF notes, student debt forgiveness is “Congress’s prerogative under our Constitution, as Congress is the branch of government that possesses the exclusive power to make law.”

Soon after PLF filed its lawsuit, however, the Biden Justice Department responded with a clever legal move to undermine PLF’s standing in court. But just a few days later, six Republican state attorneys general filed a second lawsuit building on PLF’s basic arguments about the illegality of Biden’s decision. “No statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed,” their complaint states. In furthering the contention that Biden is violating the separation of powers, the attorneys general highlight Speaker Nancy Pelosi’s own assertion in July 2021 that the president does not have the power of blanket debt forgiveness and that such cancellation would have to be “an act of Congress.”

In their lawsuit, the attorneys general also attack Biden’s reliance on the HEROES Act to justify his action. They criticize Biden for stretching the statute to essentially designate the entire country as a “disaster area” due to the COVID-19 pandemic and cite his declaration in a September 18th 60 Minutes interview—only weeks after his initial announcement of the debt cancellation—that “the pandemic is over.” In spite of Biden’s own acknowledgment that we have moved out of the pandemic, the attorneys general argue, he is relying on a “national emergency” that no longer exists to justify his power grab.

On the same day, Arizona Republican Attorney General Mark Brnovich filed a separate lawsuit against the Biden administration. Similar to the lawsuit filed by the other state attorneys general, Brnovich’s suit also argues that Biden’s unilateral cancellation of student-loan debt is an overreach of executive authority, posing a threat to both the separation of powers and placing an undue burden on the states. Specifically, Brnovich alleges that Biden’s plan would make it more difficult for state government offices to recruit legal talent and that the cancellation would increase the state’s cost of borrowing by harming the state’s tax revenue.

Another lawsuit filed by the Job Creators Network Foundation Legal Action Fund takes a slightly different approach, arguing that the Biden Department of Education “flagrantly violated the Administrative Procedure Act’s notice-and-comment requirements by crafting this massive and arbitrary debt jubilee behind closed doors without the traditional public comment period.” Under the provisions of the APA, executive branch agencies must provide a comment and review period for their “quasi-legislative rulemaking” – like enacting mass student-debt forgiveness – in order to justify their decisions since government bureaucrats are not directly elected by the people.

The biggest challenge for the groups hoping to bring these lawsuits thus far has been establishing standing in court. Standing must first be established to challenge the legality of government action. In general, a lawsuit like this must be brought on behalf of a group or individual who can prove they were harmed by a government policy or decision. As a rule, taxpayers cannot challenge federal spending, and the lawsuits must prove the loan forgiveness harmed plaintiffs in a clear and concrete way – something that is difficult given that the most obvious harms done to taxpayers by canceling student debt (inflation, tax increases, moral hazard) are indirect in nature.

This is why, for example, PLF’s lawsuit was thrown out, even if their arguments about the illegality of Biden’s decision still hold merit. PLF’s lawsuit names as the plaintiff a PLF attorney, who they argue would suffer financial harm if, as a Pell Grant recipient, he has $20,000 of debt forgiven. He is part of the Public Service Loan Forgiveness (PSLF) program, which exempts loan forgiveness from tax liabilities. However, the lawsuit argues his tax bill would increase by $1,000 because Indiana would tax the federal cancellation of $20,000 of debt as income since it did not occur as part of the PSLF program.

Shortly after the suit was filed, the Department of Education scrambled to update its FAQs to say that borrowers will be allowed to opt-out of the cancellation if they believe they will be financially harmed. Because of this, the judge overseeing the case declined to issue an injunction, saying there was no harm that needed immediate relief. A judge dismissed another lawsuit filed by the Wisconsin Institute for Law and Liberty (WILL) on similar grounds, rejecting the assertion that taxpayers have standing.

Nonetheless, the two lawsuits filed by Republican state attorneys general have thus far been allowed to move forward. The lawsuit led by the six states claims MOHELA, a student-loan servicer based in Missouri, will be financially harmed by Biden’s plan. Because student-loan servicers receive fees based on the number of accounts they service, the attorneys general argue that MOHELA will lose revenue due to student-loan balances going to zero en masse.

Arizona’s lawsuit claims that the cancellation will hurt the ability of the attorney general’s office to hire employees. It says the AG’s office relies on the PSLF program to recruit lawyers, who hold a disproportionate amount of student-loan debt. Brnovich argues the write-off will make the program for forgiveness less attractive and working for the AG’s office less lucrative.

Ultimately, Americans will have to wait to see whether the state-led lawsuits, or another suit, will be successful. If standing can be established, Americans will have to hope the judicial branch will have more respect for the Constitution’s separation of powers and the rule of law than does President Biden.

Tom Campbell is the pen name of a Washington, D.C.-based professional with more than a decade of policy and legislative experience at the state and federal levels of government.


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johnh
3 months ago

I lost a lot of respect for Newt Gingrich last nite, when he was on Hannity for a rally in Pennsylvania. He said more than once, do not vote for Democrats unless you want to vote for lies & hooray for Republicans. Newt, do you care to admit how many lies Republicans have been caught up in the last 5-years. Come on Newt & be for America & not a bobbin head for one party.

johnh
3 months ago

Biden really impressed me yesterday when he stated “None of the people or families in the top 5% of incomes will receive any of this money “. Very brilliant Joe, as how many people that are worth millions are going to have to take out college loans??

Sal Ciccio
3 months ago

Can I get an ex post facto loan? It would enhance my retirement! After all, I paid up front!

John Ternes
3 months ago

This is a form of discrimination. I would like an extra 10K. I am not considered because I am a responsible adult who doesn’t incur debt I can’t repay. As with any other loan, repayment is not negotiable unless bankruptcy or some form of debt reduction occurs. There must be consequences for irresponsible behavior. Who gives a check to a child that doesn’t understand economics and responsibility?

Jerome G.
3 months ago

I’m happy to see the lawsuits. The “separation of powers” argument seems reasonable. We don’t need to be adding to our tax burden any more because of student borrowing. It doesn’t do anything to decrease the national debt it anything except pander to their newer voting base

Michael Lewis
3 months ago

I am happy to see the separation of powers argument finally being considered. If the Constitution still has any meaning, this will be the winning argument.

PFArizona
3 months ago

SO BIDEN THINKS HE CAN USE TAXPAYER MONEY WITHOUT CONGRESSIONAL APPROVAL!
HEROES ACT:
cancels so much debt for many people because of the COVID-19 pandemic.
TUITION WAS NOT DEBT CAUSED BY COVID

zoe frost
3 months ago

The only National Emergency is the commie/globalist demoNcrat traitors desperately doing everything legal and illegal to destroy our country!

This little ploy is nothing more than another of the fraud puppet’s vote-buying efforts. BTW, the expletive and the rest of the commie D traitors don’t care if this is lawfully stopped or not, applications will be flooding in, because the clueless dolts who would vote D to keep this kind of garbage going don’t realizing it’s most likely another cabal scam. Chances are excellent the courts shut it down and no one gets a cent. Idiots will wish they had paid attention as traitors-to-our-Republic obama/biden’s recession deepens to a depression. That’s part of the fundamental transformation/build back better/Great Reset plan, it’s the deliberate destruction of America as we’ve known it …it’s the only way they get their utopia, while everyone else not in the elitist club gets boots-on-our-necks, totalitarian hell.

D G
3 months ago

This moronic, unfair and unconstitutional grab for votes needs to be stopped immediately!

H.L.Howell
3 months ago

We the people need to get rid of the patriot act.

Jonathon Wayne Hood
3 months ago

You know, this student loan debt forgiveness is a crock… Any student, young or old knew what they were entering into when they applied for and received their student loans. Yes, it has affected all of us. It is on the shoulders of everyone that has received a student loan to get it repaid, just like any other loan that you accept to take. With this mentality, any of us that have ever received a student loan should be able to have them forgiven and maybe even returned fully to those of us that have fully repaid them. A college education, of itself, isn’t a guaranteed right, it is a priviledge that has to be earned and resolved earnestly. How can our President just decide to write off millions of dollars, jst to hopefully garner votes and support? It teaches nothing of how the world works or to face your individual responsibilities. With any hope, this whole project will never fly and people will have to learn to accept their responsibilities.

PaulE
3 months ago

Half the country does accept personal responsibility. The other half looks for a handout to be paid for by everyone else but them. This so-called Executive Order is yet another example of the many poorly made and, in this specific case, completely unconstitutional and thus illegal decisions that form the core of the Democrat Party agenda. All with the sole intention of buying votes to maintain and expand their power. This is how Socialists operate in every country where they hold power. Eventually the money runs out and the economy collapses and the people are left with nothing. All as those formerly in power jet off into the sunset, aboard their private jets, with the billions they’ve stolen all along the way.

PIDL
3 months ago
Reply to  PaulE

Not Socialists! Communists.

Truc
3 months ago
Reply to  PaulE

I was lived under Communism in the Communist country for 25 years, I think Joe Biden and his Democrats are leading our country to Communism day by day.

nate
3 months ago

The RINOS let them do it.

Kay
3 months ago

This should be stopped immediately. I heard some students saying this was not enough only a drop in the bucket. They live off their parents and do not know we are 31 trillion in debt which will become in part their responsibility. We have to stop this spend, spend, spend just to buy votes for the marxist party

Jean Pizzoferrato
3 months ago

My father worked 2 jobs so I could go to college. I also worked the summer, and any time I had a chance to earn money to help my father. I wonder how many of these students worked in the summer or in the spring. PROBABLY NOT!!!!!

Jeb
3 months ago

Do the lawsuits freeze distribution of the money?

PaulE
3 months ago
Reply to  Jeb

NO!

Patriot Eric
3 months ago
Reply to  Jeb

Yes & No ….. there is no distribution of money only forgiveness of debt. The debt has been frozen since COVID, so soon enough these leaches will have to PAY back the money they legally borrowed.

Gabe Hanzeli
3 months ago

what gives biden the right to tax me to pay off some rich kids student loan debt? we all know he is just trying to buy votes.

it is literally voter fraud.

nate
3 months ago
Reply to  Gabe Hanzeli

Fraud is what politicians do best.

Jonathon Wayne Hood
3 months ago
Reply to  Gabe Hanzeli

A lot like his Southern Border Policy and with some states issuing drivers licenses and allowing illegal immigrants to apply for and receive state and national benefits. There is a legal way to be in this country, as we have laws and regulations that dictate them. Otherwise, the illegals need to be rounded up and sent back to where they entered this country. Come on folks, grow a pair to protect and safeguard our country. I assure you that there is no other sovereign nation in the world that puts up with or tolerates immigration of this sort.

PIDL
3 months ago
Reply to  Gabe Hanzeli

Yes. It is politics at its finest! Politics is called that because it cannot be called the “truth”, just opinion.

Robert Kappenberg
3 months ago

I took 1 or 2 classes for 14 years to obtain a degree while raising 4 kids, working O/T, mortgage, car loan, etc. We struggled and paid as went while I attended college. No help, and when our washing machine died, I couldn’t attend college that semester. No sympathy from me to the college wimps who signed loan papers. Biden should be more concerned with inflation, oil, gas, our border, crime, etc. My heart goes out to truck drivers, commercial fisherman, etc who have loans out for their trucks and boats. These people produce for America and they don’t whine about their loans.

Linda
3 months ago

You’re absolutely right!!!

Terri Matson
3 months ago

Good answer. Instead of a 4-year college degree, I went to 3 trade schools and several community colleges who taught me skills I could use to get good paying jobs. Oddly enough, I made more money from the trade school programs that I ever did after going to community colleges. (After 12 years of being a welder in the oil field, in a trainyard repair shop, an underground mine and a couple refineries, I pretty much HAD to work an indoor less strenuous job for less money.) I paid off my relatively tiny student loans except for the last one after I was disabled from 2 bad car wrecks. Neither one my fault. The loan I did not pay back was a couple thousand dollars.

Deb
3 months ago

i am a 71 year old woman that never had the opportunity to go to college and neither has any one in my family. It is not fair that I have to pay toward someone making up to $125,000 or family of $250,000 a year. I sure wish I could make that much a year but yet I raised my children, bought a home, car and struggled. No one offered to pay my house payment which was a loan. People working everyday jobs (lots considered essential during COVID) working in groceries, delivery drivers etc. don’t make anywhere near that amount of money, so why do we all have to pay for the loans and better opportunities they have in life to make much more money than these people have. it is just more corruption in the government. Quit giving handouts to people in this country and other countries.

johnh
3 months ago

This appears to be a political ploy for mid term elections: Biden must know that he cannot use HEROES act for this , and when he is stopped there will be a bunch of people that will blame the Republicans & lawsuits for stopping student loan payments. And Biden has also stopped need to repay your loans for rest of year.

William S Finch
3 months ago

Communist President Joe Biden is very free with taxpayer’s money! Then the next thing he will want to do is raise taxes on the rest of America to cover another government give away. We the people need to vote out every Democrat Communist in Congress! We also need term limits for Congress to bring an end to all the graft and corruption going on in Congress for the past 100 years!

John C Caravello
3 months ago

While the President clearly doesn”t have the Constitutional right to arbitrarily release $400 Billion dollars in Student Loan then Why did he do it? Furthermore, if he can forgive this debt owed why not release others from their debt to the Federal Government. Let’s have our Home mortgage debt forgiven or better yet, forgive any taxes we owe to the IRS when we make withdrawals from our Individual IRA accounts which for most of us are shrinking due to the effects to the NYSE stocks. There are clearly more important topics for our Federal Govt. to address other than those clearly meant to affect how we vote in November of this year. Thank you for reading. I mean no harm either physically or mentally to any Government elected office. I’ve merely meant only to state my opinion as an American citizen and taxpayer.

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