Lawsuit aims to stop Biden’s student loan forgiveness plan

cigaretteman

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A public interest lawyer in Indiana is suing to block President Biden’s plan to cancel some student debt, arguing that the policy will force him to pay state taxes on the forgiven amount.
The lawsuit, filed in U.S. District Court for the Southern District of Indiana Tuesday, is the first significant legal action seeking to invalidate Biden’s policy before it takes effect.


The Pacific Legal Foundation, the conservative public interest law firm in California that is backing the new lawsuit, asserts that the executive branch lacks the authority to create a new forgiveness policy and is usurping Congress’s power to make law. Plaintiff Frank Garrison works for the foundation.
CBO: White House plan to cancel student loan debt costs $400 billion
The argument is in line with other objections to Biden’s plan, but the foundation may have the one thing legal experts said was needed to make a legitimate case, a client with the standing to sue.



Garrison said he has been working toward having his federal student loans canceled through a program that erases the debt of public servants after 10 years of payments and service. Participants in that Public Service Loan Forgiveness program do not have to pay federal or state taxes. However, Biden’s plan could result in borrowers in several states, including Indiana, being required to pay local tax bills.
Since Biden’s plan would take effect before Garrison’s debt is forgiven through the public service program, Garrison said he expects to pay more than $1,000 in state income taxes for the $20,000 of forgiven debt.
Republican state attorneys general and lawmakers have been exploring the possibility of a lawsuit against Biden’s forgiveness plan, and the Job Creators Network pledged to sue the administration once the Education Department guidance has been released.
This is a developing story and will be updated.

 

tarheelbybirth

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Garrison said he has been working toward having his federal student loans canceled through a program that erases the debt of public servants after 10 years of payments and service. Participants in that Public Service Loan Forgiveness program do not have to pay federal or state taxes.
Somebody might need to tell Mr. Garrison that 99% of all requests for forgiveness under that program have been denied. He must not have gotten the memo.
 
May 27, 2021
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If this is the case then can’t we sue for basically anything that raise our taxes?
The entire point of all this is you can forgive student loan debt through Congress, but not through executive order. It’s not great to say the pandemic is over and then cite the pandemic as the reason to forgive student loans. 🤷‍♂️
 
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Aardvark86

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1. Just a fun fact - as I walked into my office this morning, the WaPo's front lobby featured their giant "front page" which included the story to the effect that CBO had scored forgiveness at somewhere between $400-420B. Not exactly a great look for defending a "major questions doctrine" claim.
2. But, as I've noted earlier, I really do think they're going to have a hard time coming up with a plaintiff that has standing. About the only party I can think of would be a student loan servicing company whose business has been devalued by forgiveness. This guy? Not so much.
3. As I've said before, this is another example of all that is wrong with present day advocacy of constitutional policy questions. The reality is that think thank plaintiffs like Pacific legal don't actually have a real client. They bring these cases solely to try to achieve their own policy hardons, which are usually pretty flaccid to begin with given that these appellate types are among the biggest nerds on the planet. (And that goes for both left and right advocacy think tanks.)
 

theiacowtipper

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I posted this in another thread. They can get around the standing argument by simply making the program optional. This guy wouldn't have to participate if he doesn't want to pay state taxes. He can just pay the 10 grand and be done with it. If you're harmed by the forgiveness you can opt out.
 

theiacowtipper

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The entire point of all this is you can forgive student loan debt through Congress, but not through executive order. It’s not great to say the pandemic is over and then cite the pandemic as the reason to forgive student loans. 🤷‍♂️
But it's entirely up to the president to determine what is and what is not an emergency. That has been adjudicated and ruled on by the Supreme Court I believe. For instance, Trump declared a border emergency and redirected funding to the border wall. The law is plain as day that loans can be adjusted or forgiven if there is an emergency, and declaration of an emergency is at the sole discretion of the president.

The only reason that a court would rule another way is partisan politics. Period.
 

Aardvark86

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But it's entirely up to the president to determine what is and what is not an emergency. That has been adjudicated and ruled on by the Supreme Court I believe. For instance, Trump declared a border emergency and redirected funding to the border wall. The law is plain as day that loans can be adjusted or forgiven if there is an emergency, and declaration of an emergency is at the sole discretion of the president.

The only reason that a court would rule another way is partisan politics. Period.
I'm not so sure I agree with that. You are certainly correct in the example you cite, and to be sure, presidential emergency declarations pursuant to congressional grants of authority are likely to get a fair bit of deference.

But, I do think the major questions doctrine as articulated last term in WV v EPA calls all forms of supposed "carte blanche" authority into question. Indeed, even before WV, in situations where Congress itself has provided by statute that judicial review of an executive action is precluded, courts have entertained claims that executive actions can be so far astray of the grant authority as to be ultra vires (no pun intended in this case). Hard claims to win, to be sure, but this is not exactly a rosy factual situation and the proximate relationship between the nature and continuity of the emergency (public health) and the action in question (wholesale student loan forgiveness) is not exactly tight. Moreover, it's an issue that's been floated (unsuccessfully) with the legislature.
 

Rifler

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So this guy, and others like him should be able to opt out of the Biden student loan forgiveness package...
 

fsu1jreed

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Somebody might need to tell Mr. Garrison that 99% of all requests for forgiveness under that program have been denied. He must not have gotten the memo.

Because the morons didn't file BEFORE the 10 years of payments, had filing errors, etc....
 

Huey Grey

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Finance85

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Actually Indiana has changed. Prior to this, they have been following the American Rescue Plan Act which lifts taxation on loans. But now Indiana has chosen to part ways on this one issue.

This has nothing to do with the American Rescue Plan Act. Every other loan forgiven in Indiana, and other states, is taxable.
 
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tarheelbybirth

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Because the morons didn't file BEFORE the 10 years of payments, had filing errors, etc....
There were cases where the DoE claimed that public school teachers didn't qualify as public servants. If 99% of ALL applicants are rejected, it really can't be because they're all "morons". It might be because the program is set up in such a way that qualifying is almost impossible.
 

Huey Grey

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This has nothing to do with the American Rescue Plan Act. Every other loan forgiven in Indiana, and other states, is taxable.
The Act is just one component. And Indiana did change its laws concerning student loans last year.

If Indiana is the one the one that changed its laws, if Indiana is the one collecting the taxes, and if Indiana is the one that chose to opt out of the federal Act, even though they were following it, then why shouldn't Indiana be the party sued?

 
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Finance85

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The Act is just one component. And Indiana did change its laws concerning student loans last year.

If Indiana is the one the one that changed its laws, if Indiana is the one collecting the taxes, and if Indiana is the one that chose to opt out of the federal Act, even though they were following it, then why shouldn't Indiana be the party sued?

If the student loan had been forgiven because of public service, there would be no tax penalty in Indiana. That's the basis for the lawsuit. The tax penalty is because the loan is being forgiven because of other reasons.
 
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bhawk24bob

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There were cases where the DoE claimed that public school teachers didn't qualify as public servants. If 99% of ALL applicants are rejected, it really can't be because they're all "morons". It might be because the program is set up in such a way that qualifying is almost impossible.

99% of applicants are no longer rejected, that ended when Devos departed. They are literally forgiving student loans for anybody that's worked at a non profit, the government, etc. for 120 months. You are a moron if you haven't been able to get it through post-Devos.
 

Huey Grey

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If the student loan had been forgiven because of public service, there would be no tax penalty in Indiana. That's the basis for the lawsuit. The tax penalty is because the loan is being forgiven because of other reasons.
If Indiana would have done nothing, and not changed its laws, there would be no tax. The federal government gave all sorts of relief for these taxes and is still gives out this relief. And Indiana partook in them. But then Indiana changed its laws to opt out of this tax relief. It's then on Indiana for raising taxes on its people in situations like this.
 

fsu1jreed

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There were cases where the DoE claimed that public school teachers didn't qualify as public servants. If 99% of ALL applicants are rejected, it really can't be because they're all "morons". It might be because the program is set up in such a way that qualifying is almost impossible.

I qualified and so did every other one of my coworkers (8 of them that I knew about)....I guess we were just lucky and the teacher program is different from the public service
 

theiacowtipper

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I'm not so sure I agree with that. You are certainly correct in the example you cite, and to be sure, presidential emergency declarations pursuant to congressional grants of authority are likely to get a fair bit of deference.

But, I do think the major questions doctrine as articulated last term in WV v EPA calls all forms of supposed "carte blanche" authority into question. Indeed, even before WV, in situations where Congress itself has provided by statute that judicial review of an executive action is precluded, courts have entertained claims that executive actions can be so far astray of the grant authority as to be ultra vires (no pun intended in this case). Hard claims to win, to be sure, but this is not exactly a rosy factual situation and the proximate relationship between the nature and continuity of the emergency (public health) and the action in question (wholesale student loan forgiveness) is not exactly tight. Moreover, it's an issue that's been floated (unsuccessfully) with the legislature.
This is why people hate lawyers. A law was passed saying that, in time of emergency the terms of student loans can be changed. The president has broad power to decide what an emergency. Now there is the potential that a conservative Supreme Court will say that 1+1 isn’t 2.
 

theiacowtipper

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I qualified and so did every other one of my coworkers (8 of them that I knew about)....I guess we were just lucky and the teacher program is different from the public service
I don’t qualify because I was dumb enough to choose the wrong repayment plan. I chose the one that gradually increases payments over time.
 
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This is why people hate lawyers. A law was passed saying that, in time of emergency the terms of student loans can be changed. The president has broad power to decide what an emergency. Now there is the potential that a conservative Supreme Court will say that 1+1 isn’t 2.
So if the President declares the Pandemic over, is that just bluster or what?!?
 

Aardvark86

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This is why people hate lawyers. A law was passed saying that, in time of emergency the terms of student loans can be changed. The president has broad power to decide what an emergency. Now there is the potential that a conservative Supreme Court will say that 1+1 isn’t 2.
People don't hate lawyers. They hate the other side's lawyers when they lose, (Personally, I hate lawyers that don't represent actual clients, but rather just represent their own personal whims, which is what most think tank lawyers do). Look, I get the plain language appeal of the presidential delegation. But there is in fact a very important aspect of our system whereby powers are inherently limited, and the positions based on that premise are hardly unreasonable.
 
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RNHawk

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I don’t qualify because I was dumb enough to choose the wrong repayment plan. I chose the one that gradually increases payments over time.
I don’t qualify because I was dumb enough to pay my student loans off
 

theiacowtipper

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One of my coworkers was on that payment plan and she was accepted
Interesting. It won’t apply to me anyway. Probably. I don’t have ten years in the program. I’m below 10k now so if the forgiveness holds it won’t be an issue. If I get over ten years and the forgiveness is overturned I might apply.
 

theiacowtipper

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I don’t qualify because I was dumb enough to pay my student loans off
😢😢😢😢😢
You know, I sat and watched as other special interest group got paid. Businesses during the pandemic when they were making a profit. Farmers. I’m not said that this one benefits me.
 
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theiacowtipper

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People don't hate lawyers. They hate the other side's lawyers when they lose, (Personally, I hate lawyers that don't represent actual clients, but rather just represent their own personal whims, which is what most think tank lawyers do). Look, I get the plain language appeal of the presidential delegation. But there is in fact a very important aspect of our system whereby powers are inherently limited, and the positions based on that premise are hardly unreasonable.
I’m genuinely curious. Why shouldn’t the plain language hold? It doesn’t seem to demand interpretation. It’s the plain language.
 

fsu1jreed

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Interesting. It won’t apply to me anyway. Probably. I don’t have ten years in the program. I’m below 10k now so if the forgiveness holds it won’t be an issue. If I get over ten years and the forgiveness is overturned I might apply.

You have to apply and be approved BEFORE you make the payments.....unless the rules have changed in the 8 years since I was approved
 

theiacowtipper

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You have to apply and be approved BEFORE you make the payments.....unless the rules have changed in the 8 years since I was approved
I haven’t looked in some time, but one of the questions in the all was of you’ve made 10 years of payments. I need to do more research depending.
 

fsu1jreed

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I haven’t looked in some time, but one of the questions in the all was of you’ve made 10 years of payments. I need to do more research depending.

My HR did a workshop on this after other coworkers found out the hard way before I started working there
 
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