Federal judge dismisses Libertarian group's challenge to student debt relief program

INDIANAPOLIS — A federal judge has ruled in favor of the U.S. Department of Education in a case brought on by a California Libertarian group challenging President Joe Biden's plan to cancel student debt nationwide.

For the second time, United States District Court Judge Richard Young dismissed a complaint filed by Pacific Legal Foundation on behalf of two Indiana residents who argued that the plan would create a tax liability for them.

One of the plaintiffs, Frank Garrison, is an attorney for the legal advocacy group. Since he and co-plaintiff Noel Johnson are both eligible for automatic debt cancellation and live in Indiana, they'd both be taxed. Indiana is one of seven states that plans to tax any debt forgiven in Biden's plan.

But Young found that it was a legislative decision by Indiana lawmakers that created a tax liability for the two men — not the federal government's student relief program.

"Thus, the injury-in-fact is not fairly traceable to the Defendants—the United States Department of Education and Miguel Cardona, the Secretary of Education," reads an entry dismissing the complaint.

In response, the plaintiffs are appealing Young's ruling. A notice of appeal has been filed in the U.S. Court of Appeals for the Seventh Circuit.

Earlier this month, Pacific Legal Foundation filed an amended complaint after Young rejected its initial argument. In his reasoning for rejecting the initial complaint, Young said Garrison "cannot be irreparably harmed" by the federal government's student debt relief program.

On Friday, a U.S. appeals court temporarily blocked the plan as various parties worked to allow the scheme to progress while others work to block it, Reuters reported.

Biden made the announcement in recent months that his administration planned to work to forgive at least $10,000 in federal loans for eligible borrowers. It was a version of a campaign promise that the president has worked to see carried out.

A federal judge on Thursday dismissed an effort by multiple Republican-led states to block the president's student loan forgiveness plan, relieving debt for tens of millions of student loan borrowers, according to the Associated Press.

U.S. District Judge Henry Autrey in St. Louis said because the six states, including Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina, all failed to establish standing, Autrey said, “the Court lacks jurisdiction to hear this case.”

Nebraska Attorney General Doug Peterson's office said states will appeal. A statement said the states "continue to believe that they do, in fact, have standing to raise their important legal challenges.”