INDIANAPOLIS — Since President Joe Biden's August announcement of student loan forgiveness, legal experts have known there would be some sort of challenge to the plan. However, finding someone who could say the forgiveness would negatively impact stumped some people. That's no longer the case.
Pacific Legal Foundation, a Libertarian public interest law firm, is representing Frank Garrison in a lawsuit against the U.S. Department of Education and Secretary Miguel Cardona. The lawsuit lays out why Garrison would be harmed.
RELATED: Garrison v U.S. Department of Education court documents
Garrison, who works for Pacific Legal Foundation as an attorney, is on track to have his student loans forgiven, tax free, through the Public Service Loan Forgiveness program. He's on year 6 of monthly payments through the 10-year-plan. After 10 years, the remainder of his student loan debt would be forgiven tax-free. However, Biden's plan would automatically cancel $20,000 Garrison's debt. Indiana is one of seven states that plans to tax any debt forgiven in Biden's plan, so Garrison would owe more than $1,000 in state and local taxes.
RELATED: Pacific Legal Foundation's release on their lawsuit
Michael Poon, a lawyer on the case, says besides the tax liability it would create for people, there's also another big problem.
"This entire program is illegal," Poon said. "The president is ignoring law that says when the Federal Government makes loans to student borrowers, those loans have to be paid back unless Congress makes an exception like the Public Service Loan Forgiveness program."
As of this article being published, the Biden Administration has not commented on this suit, but has pushed back on claims the debt forgiveness is illegal. Education Secretary Miguel Cardona says the "Heroes act of 2003" allows him to cancel debt for people who faced hardship during the pandemic.
RELATED: Department of Education explains why they have legal authority to cancel student loans
An estimated 8 million people won't have to apply for student loan forgiveness because they're on Income-Driven-Repayment plans. The government knows how much they make and if they'd qualify. Garrison is one of those people which is why his legal team thinks he has a case.
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