By Robby Soave | Reason
President Joe Biden’s plan to forgive hundreds of billions of dollars in student loan debt violates both federal law and the Constitution, according to a just-filed lawsuit from the Pacific Legal Foundation (PLF), a libertarian law firm.
“This isn’t how laws are supposed to be made,” Caleb Kruckenberg, an attorney for PLF, tells Reason. “Only Congress has the power to pass laws and spend money under the Constitution. The administration’s actions here are flagrantly illegal.”
This is the first serious challenge to Biden’s student loan forgiveness plan, which he announced last month. The lawsuit’s plaintiff is Frank Garrison, who’s also an attorney at PLF. Garrison borrowed federal student loans to pay for law school, but according to him, Biden’s debt forgiveness plan will actually subject him to a financial penalty in the form of a state tax. This gives him standing to sue the U.S. Education Department, his lawsuit argues.
“Despite the staggering scope of this regulatory action, it was taken with breathtaking informality and opacity,” the lawsuit claims. “In the rush, the administration has created new problems for borrowers in at least six states that tax loan cancellation as income.”
“Giving away free money is popular. But Presidents don’t generally have Constitutional authority to spend money. The Constitution grants Congress the power to pay debts. It grants the President the power to enforce laws. Biden claims to have authority to cancel student loan debt pursuant to the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, which allows that some student debt may be waived when necessary in connection with a national emergency. It is a stretch to see how the administration can simultaneously recognize that the pandemic is over and also declare debt cancellation based on the COVID national emergency. This debt cancellation clearly stretches the HEROES Act beyond its intent. It may stretch it beyond any reasonable interpretation. This lawsuit points out an interesting issue. People whose debts are cancelled generally owe income taxes on the cancelled debt. For workers seeking cancellation through public employment, this cancellation may be nothing more than a tax burden.”
