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Judge rejects Libertarian group's legal challenge to Biden's student debt cancellation plan

Joe Biden
Posted at 12:39 PM, Sep 30, 2022

INDIANAPOLIS — A federal judge has rejected a California Libertarian group's legal challenge to President Joe Biden's plan for student debt cancellation.

Richard L. Young, a United States District Court judge for the Southern District of Indiana, denied a request by plaintiff Frank Garrison and the Pacific Legal Foundation to temporarily block the plan, saying Garrison "cannot be irreparably harmed" by the plan.

Young has given Garrison until Oct. 10 to amend his argument.

The Pacific Legal Foundation, a legal advocacy group, is representing Garrison in the lawsuit against the U.S. Department of Education and Secretary Miguel Cardona. It alleges that the plan would create a tax liability, as Indiana is one of several states that plans to tax any student debt canceled by Biden's plan.

The plan would automatically cancel $20,000 of Garrison's debt. Garrison would owe more than $1,000 in state and local taxes.

"This entire program is illegal," said Michael Poon, a lawyer on the case. "The president is ignoring (a) 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."

Biden's plan promises to cancel $10,000 in federal student debt for borrowers with incomes of less than $125,000 per year or households
making less than $250,000. Those who received federal Pell Grants to attend college would get an additional $10,000 erased.

Education Secretary Miguel Cardona says the HEROES Act of 2003 allows him to cancel debt for people who faced hardship during the pandemic. That plan aimed to provide help to members of the military, the Associated Press reports.

But the suit argues that Garrison and others will see their debt burdens increase as a result of Biden's plan. It also says the plan doesn't meet the requirements of the 2003 law, arguing that the problem of high student debt is not a "direct result" of the pandemic, according to the AP.

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, according to the AP.

Any student debt forgiven under Biden's plan is also considered taxable income in Arkansas, California, Minnesota, Mississippi, North Carolina and Wisconsin. That is, unless the laws in those states are changed, according to the AP.