Wisconsin law firm sues to block student loan forgiveness
A conservative Wisconsin law firm on Tuesday sued to stop federal student loan forgiveness, saying President Joe Biden’s loan forgiveness plan is discriminatory and constitutes taxation without representation.
The Wisconsin Institute for Law and Liberty's federal lawsuit asks a judge to immediately block student loan forgiveness until the lawsuit plays out.
"The president has no authority to order a wholesale forgiveness of student loans, costing taxpayers up to a trillion dollars. Whether this plan is good for America is for Congress to decide," said Rick Esenberg, the institute's president.
Biden enacted the debt relief plan under the HEROES Act, which was passed after the Sept. 11 attacks sparked an American-led military campaign aimed at terrorism. The act gave the executive branch authority to forgive student loan debt in association with military operations or national emergencies.
The president cited COVID-19 as reason to invoke the act, a move the Wisconsin Institute for Law and Liberty's complaint argues is an overextension of executive power that improperly circumvents Congress. The complaint also alleges that Biden's plan is discriminatory because he has said it will help to “narrow the racial wealth gap” and support Black borrowers.
A White House spokesperson did not immediately respond to requests for comment on the lawsuit, But White House press secretary Karine Jean-Pierre addressed resistance to loan forgiveness in a briefing on Tuesday.
“It’s a shame that you have Republicans out there – Republican groups, Republican states that are trying to stop Americans from getting a little bit of a breathing room,” she said, adding, "We’re talking about 40 million Americans that could benefit from getting student loan relief. It is shameful that they are siding with the special interests. It is shameful that they are not siding with the American people on this.”
WILL sued on behalf of the Brown County Taxpayers Association against Biden, Education Secretary Miguel Cardona, the Department of Education and the Office of Federal Student Aid and its chief operating officer.
Similar lawsuits have been filed in other states. In Indiana, a libertarian group is arguing that Biden’s plan creates additional tax burdens for students who would have their loans forgiven by other means. Six Republican-led states also filed a lawsuit in Missouri last week raising specific objections to loan forgiveness for federal loans that are owned by private banks. The Biden administration quickly removed eligibility for the estimated 770,000 borrowers with such loans.
The Department of Education estimates that student loan cancellation alone will cost around $300 billion over the next decade. But an analysis by the University of Pennsylvania, cited in WILL’s lawsuit, projects a cost up to $519 billion and says that could exceed $1 trillion depending on details that haven't been released yet.
The one-time loan forgiveness plan includes income requirements aimed at low- and middle-income families. It provides up to $20,000 in debt relief to students who received a Pell Grant and up to $10,000 in assistance to students who did not. The Biden administration has said applications for loan forgiveness will open in October, but officials have yet to provide a specific date. Applications will be accepted through Dec. 31.