Federal judge dismisses lawsuit against Biden’s student debt bailout

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A federal judge has dismissed a legal challenge to President Biden’s $420 billion student debt write-off, saying the plaintiff lacked standing.

The Wisconsin-based Brown County Taxpayer’s Association filed its suit on Tuesday, arguing that the president’s plan to cancel up to $20,000 in student loan debt for borrowers earning less than $125,000 violates the separation of powers doctrine under the Constitution.

The group also said the plan violates taxpayers’ equal protections guaranteed under the 5th Amendment by specifically aiming to “advance racial equity.”

“Student loan debt relief takes from one group of people and arbitrarily distributes the spoils to another group,” said Rich Heidel, the association’s president. “The plan amounts to nothing more than a modern-day version of King George III’s Stamp Act where there was massive taxing and spending without participation of the people’s representatives.”

The group argued that as taxpayers, they are “on the hook” for the plan.

“They will pay more in taxes to support a federal treasury that will be over $1 trillion smaller thanks to defendants’ unlawful program,” the complaint stated.

But U.S. District Court Judge William Griesbach rejected the group’s argument on Thursday, saying taxpayers do not automatically have standing to sue to block government programs that would increase taxes.

“In the absence of standing, plaintiff’s case must be dismissed for lack of jurisdiction,” Judge Griesbach wrote in his decision.

“The court also notes, however, that even if plaintiff did have standing, it is unclear that the preliminary relief plaintiff seeks would be appropriate,” he wrote. “A substantial question remains as to whether plaintiff can demonstrate that it will suffer irreparable harm.”

Mr. Biden unveiled his long-awaited plan last month, which includes canceling $10,000 in student debt for borrowers who earn less than $125,000 per year and an additional $10,000 in debt for Pell Grant recipients.

Mr. Biden’s plan calls for lowering monthly payments on outstanding undergraduate loans from 10% to 5% of discretionary income, and forgives loan balances after 10 years of payments, instead of 20 years for original loan balances of $12,000 or less.

He also announced one “final” pause on federal student loan repayments brought on by the COVID-19 pandemic through December.

The Congressional Budget Office estimates that the plan will cost taxpayers $400 billion.

The CBO also estimates that the pause on federal student loan payments through December will cost an additional $20 billion.

The administration scaled back certain eligibility requirements last week, making federally guaranteed student loans held by private lenders ineligible for cancelation. The Department of Education said last Thursday that the change would affect 770,000 borrowers.

Mr. Biden has faced backlash from both sides of the aisle since announcing the forgiveness, and the plan has been met with legal challenges on multiple fronts.

Six Republican-led states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — sued last week to stop the rollout of the forgiveness plan, arguing that the president does not have the legal authority to write off the billions in debt.

An Indiana-based public interest attorney argued in a separate suit filed last week that the move is an illegal overreach by the administration that would increase state tax burdens for some who have their debt forgiven automatically.





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