Legal Challenges to Student Loan Cancellation Plan Launched

The legal challenges to the federal government’s plan to cancel student loan debt for individuals making less than $125,000 a year have started, with a pair of suits claiming the administration failed to take the proper steps before announcing the plan.

One lawsuit was filed by the Pacific Legal Foundation, a conservative organization, and the other was filed by six state Attorneys General — from Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina — all Republicans. Both suits claim the president lacks the authority to authorize this type of action and must first obtain Congressional approval.

Background: The federal government announced in late August that individuals making less than $125,000 per year would be eligible to have up to $10,000 of their student loan debt extinguished — $20,000 if the debt was in the form of a Pell Grant.

Suit Number One: The plaintiff, who lives in Indiana, is suing because he claims his debt will be automatically wiped out, and that he lives in a state where officials have indicated that the extinguished debts may be taxed, therefore personally harming him. But, according to a spokesperson for the Department of Education, the debts will not automatically be wiped off the accounts of eligible individuals. Anyone who does not want to have the debts removed will be able to opt out of doing so, the spokesperson said. Where that leaves the suit in question remains to be seen.

Suit Number Two: The Attorneys General claim the plan to cancel student loan debt is unlawful and arbitrary, violating the separation of powers and the Administrative Procedures Act by failing to get Congressional approval.

They said it: “President Biden’s unlawful political play puts the self-wrought college-loan debt on the backs of millions of hardworking Americans who are struggling to pay their utility bills and home loans in the midst of Biden’s inflation,” said Arkansas Attorney General Leslie Rutledge, in a statement. “President Biden does not have the power to arbitrarily erase the college debt of adults who chose to take out those loans.”

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