Taxpayers' Group Asks Supreme Court to Block Biden Student Loan Forgiveness – Investopedia
A Wisconsin taxpayers’ group asked the Supreme Court to block President Joe Biden’s student debt relief program, just days after the application was officially launched.
The Brown County Taxpayers Association filed a lawsuit earlier this month in Eastern Wisconsin’s Federal District Court against President Biden and U.S. Department of Education Secretary Miguel Cardona, saying the forgiveness plan was unconstitutional because it violated the separation of powers between Congress and the executive branch as well as breaching the 5th Amendment’s equal protection doctrine by stating its intent to advance racial equity. A federal judge dismissed the case three days later, ruling that the BCTA doesn’t have standing to block Biden's plan.
In response, the BTCA filed an appeal of this ruling to the Court of Appeals for the Seventh Circuit. Then, on Wednesday, the BTCA asked the Supreme Court to suspend Biden's plan pending the outcome of the ruling's appeal. The request was directed to Associate Justice Amy Coney Barrett, who's responsible for handling emergency application requests from the Seventh Circuit.
By the time Biden announced the application for debt relief program had officially launched some 8 million people had already signed up during Beta testing, seeking relief of up to $20,000 each. If the Supreme Court chooses not to grant the BTCA's request, then the earliest the Department of Education could to discharge any debt is Oct. 23, while debt relief for borrowers who are automatically eligible won't be processed until Nov. 14.
The BTCA isn’t the first group to take legal action in response to Biden’s plan. On Oct. 10, the Job Creators Network filed a lawsuit saying it violates the Administrative Procedure Act’s notice-and-comment procedures. Meanwhile, in late September, six Republican-led states filed a lawsuit saying loan forgiveness constituted harm for private banks that own federal loans. The Biden administration later removed eligibility for borrowers with privately held federal loans.
The Pacific Legal Foundation filed another challenge, saying it would create a tax burden for borrowers living in the states planning to tax Biden’s student debt relief who would have had their loans forgiven by other means, such as Public Service Loan Forgiveness, which isn’t subject to state taxation. Earlier last month, an Oregon homeowner filed a complaint saying the plan constitutes harm on the basis that it will lead to higher inflation, resulting in an increased interest rate on his mortgage.
None of the lawsuits have so far panned out. The biggest hurdle opponents face is locating plaintiffs with the legal standing to oppose debt relief in federal court. It’s no easy feat to definitively prove both that Biden’s student debt relief would constitute harm and that blocking it would sufficiently prevent this. However, if a party can have their case heard by the Supreme Court, then recent rulings suggest it will strike down Biden’s debt relief plan. As such, even if the Supreme Court doesn’t act on the BTCA’s request, the appellate court decision is still worth watching.
BCTA. "Brown County Taxpayers’ Association Files Lawsuit."
AP News. "Judge Dismisses Wisconsin Lawsuit Against Loan Forgiveness.
NPR. "The Application for Biden's Student Loan Relief Is Open. Here's What to Know About It."
CourtListener. "Defendants’ Memorandum of Law in Opposition to Plaintiffs' Motion for Preliminary Injunction," Page 9.
Job Creators Network. "Job Creators Network Foundation Legal Action Fund Files Lawsuit to Block Biden Administration’s Illegal Student Loan Bailout."
AP News. "GOP States Sue Biden Administration Over Student Loan Plan."
Tax Foundation. "States That Might Tax Student Loan Debt Cancellation."
AP News. "Libertarian Group Sues to Block Student Debt Cancellation."
ACA International. "Oregon Consumer Challenges Department of Education’s Student Loan Forgiveness Plans in Court."
Virginia Law Review. "Standing and Student Loan Cancellation."
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