(Luis Cornelio, Headline USA) The Biden administration is facing a scathing lawsuit over its newly launched student loan forgiveness plan.
The legal challenge, brought forward by the conservative group New Civil Liberties Alliance (NCLA), alleges that the Department of Education violated the U.S. Constitution when it released the plan.
NCLA, on behalf of the Cato Institute and the Mackinac Center for Public Policy, vehemently criticized the plan in a press release announcing the lawsuit on August 4.
Detailing what they believe to be an illegal “scheme,” NCLA explained, “The latest scheme would immediately wipe out $39 billion of student loan debt owed to the U.S. Treasury by more than 800,000 people under the Income-Driven Repayment (IDR) program by crediting non-payments during periods of forbearance as monthly payments.”
The conservative group added, “The plan would cancel even more debt prematurely at taxpayer expense for another 2.8 million IDR borrowers in the future. The Department has no lawful authority to do this.”
NCLA argues that the Biden administration’s plan directly violates the Constitution’s Appropriations Clause. The group explained that the clause “grants Congress near-exclusive authority to cancel debt owed to the Treasury.”
The Supreme Court initially struck down an earlier version of the plan, citing the Biden administration’s lack of authority to expand a program initially aimed at aiding veterans fighting student loans.
Similarly, the group contends that the Biden administration’s approach sidesteps requirements in the already-active “Public Service Loan Forgiveness” program, which allows borrowers to have their loans forgiven if they complete ten years of work for non-profits while also making monthly payments.
In a scathing rebuke, Sheng Li, Litigation Counsel at NCLA, asserted, “[T]he strategy seems to be to cancel $39 billion faster than a court can review and stop this blatantly unlawful act.”
Mark Chenoweth, President and General Counsel at NCLA, echoed Li’s concerns, stating unequivocally, “Non-payments are not payments. No amount of nonsense changes the essential fact Congress required debtors to make payments before receiving debt relief.”
In response to the lawsuit, the Biden administration issued a statement to the Washington Post, characterizing it as “a desperate attempt from right-wing special interests to keep hundreds of thousands of borrowers in debt, even though these borrowers have earned the forgiveness that is promised through income-driven repayment plans.”
