Small business group files suit over Biden student loan plan

Oct 10, 2022, 8:43 AM | Updated: Oct 11, 2022, 5:38 am
FILE - President Joe Biden speaks about student loan debt forgiveness in the Roosevelt Room of the ...

FILE - President Joe Biden speaks about student loan debt forgiveness in the Roosevelt Room of the White House, Aug. 24, 2022, in Washington. A small business advocacy group has filed a new lawsuit seeking to block the Biden administration’s efforts to forgive student loan debt for tens of millions of Americans. (AP Photo/Evan Vucci, File)

(AP Photo/Evan Vucci, File)

WASHINGTON (AP) — A small-business advocacy group has filed a new lawsuit seeking to block the Biden administration’s efforts to forgive student loan debt for tens of millions of Americans — the latest legal challenge to the program.

The suit, filed Monday by the Job Creators Network Foundation, argues the Biden administration violated federal procedures by failing to seek public input on the program. It’s one of a handful of lawsuits that have been filed by conservative business groups, attorneys and Republican lawmakers in recent weeks as the Biden administration tries to push forward with its plan to cancel billions in debt before November’s midterm elections.

Elaine Parker, president of Job Creators Network Foundation, slammed the program as executive overreach and complained that it does nothing to address the root cause of rising debt: the “outrageous increase in college tuition that outpaces inflation every single year.”

“This bailout is going to affect everyone in this country because of the mass size of the program,” she said. “And everyone should have the opportunity to provide their views to the government.” She added: “These universities need to be held accountable for this student debt crisis.”

The Job Creators Network Foundation has previously turned to the courts to try to to block the Biden administration’s COVID-19 vaccine mandate on businesses. It also sued Major League Baseball in 2021 for moving the All-Star game out of Atlanta over objections to changes to Georgia’s voting laws. That lawsuit, which cited losses to local businesses, was later dropped.

The new lawsuit is one of a growing number of legal challenges trying to halt the proposal laid out by President Joe Biden in late August to cancel up to $20,000 in debt for certain borrowers.

Six Republican-led states filed suit late last month, accusing the Biden administration of overstepping its executive powers, as did the Pacific Legal Foundation, a Sacramento, California, legal advocacy group. Their lawsuit, filed in federal court in Indiana, calls the plan an illegal overreach that would increase state tax burdens for some Americans who get their debt forgiven.

Meanwhile, a federal judge in Wisconsin last week dismissed a lawsuit from a local taxpayers group, the Brown County Taxpayers Association, that sought to block the program, ruling that the group didn’t have standing to bring the lawsuit. The group had argued that Biden’s order unlawfully circumvented Congress’ power over spending and said the plan was discriminatory because it sought to give particular help to borrowers of color.

The latest lawsuit, filed in U.S. District Court for the Northern District of Texas against the U.S. Education Department and its secretary, Miguel Cardona, takes issue with how the plan was developed. It alleges the Biden administration violated the Administrative Procedure Act’s notice-and-comment procedures. It also challenges the administration’s legal justification for the program.

The suit includes two plaintiffs: one who does not qualify for debt forgiveness because the plan excludes commercially held loans that are not in default, and one who did not receive a Pell grant and is therefore entitled to less debt forgiveness under the plan.

“Behind closed doors, the Department promulgated a new Debt Forgiveness Program that will affect tens of millions of Americans and cost hundreds of billions of dollars,” the lawsuit reads. “Instead of providing notice and seeking comment from the public, the Department hammered out the critical details of the Program in secret and with an eye toward securing debt forgiveness in time for the November election.”

It also alleges the department “made numerous arbitrary decisions about the Program, including which individuals will receive debt forgiveness, how much of their debt will be forgiven, and which types of debt will qualify for the Program.”

“The result of this arbitrariness is predictable: some will benefit handsomely, some will be shortchanged, and others will be left out entirely,” it reads.

The case was assigned to U.S. District Judge Reed O’Connor, who most notably ruled in 2018 that the Affordable Care Act was unconstitutional. The Supreme Court reversed that decision last year. O’Connor, an appointee of former President George W. Bush, also has ruled against other policies pursued by Democratic administrations. Last month, he ruled that an ACA provision that required coverage of an HIV prevention drug violates a Texas employer’s religious beliefs.

Civil lawsuits filed in the federal court in Fort Worth have a 90% chance of going either to O’Connor or Judge Mark Pittman, an appointee of former President Donald Trump, according to a 2020 order of the court.

White House spokesman Abdullah Hasan responded with a statement defending the loan forgiveness program.

“While opponents of our plan are siding with special interests and trying every which way to keep millions of middle-class Americans in debt, the President and his Administration are fighting to lawfully give middle-class families some breathing room as they recover from the pandemic and prepare to resume loan payments in January,” he said in a statement.

The Biden debt forgiveness program will cancel $10,000 in student loan debt for individuals making less than $125,000 a year or households making less than $250,000. Pell grant recipients, who typically demonstrate more financial need, will be eligible for an additional $10,000.

The Biden administration used an act passed after the Sept. 11, 2001, terrorist attacks as legal justification for the program. The law gives the administration “sweeping authority” to reduce or eliminate student debt during times of national emergency, the Justice Department said in an August legal opinion. The administration cited the COVID-19 pandemic as its emergency.

The Congressional Budget Office estimates the program will cost taxpayers $400 billion over the next three decades.

___ Associated Press writers Seung Min Kim and Mark Sherman contributed to this report.

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Small business group files suit over Biden student loan plan