Another set of opponents seeks to challenge President Joe Biden’s student loan forgiveness plan in the latest attempt to block the program through the U.S. Supreme Court.
On Tuesday, Indiana student loan borrowers Noel Johnson and Frank Garrison filed an emergency request, arguing that the initiative is unlawful and forces them to pay more in taxes, given that the canceled debt is technically taxable income per state law.
“The administration is attempting to erase half a trillion dollars in debt without any legal basis,” said Caleb Kruckenberg, an attorney at the Pacific Legal Foundation, the law firm representing the two men challenging the plan. “The Court ought to put the brakes on this lawless action while it’s considered by the courts.”
Nearly two weeks ago, Associate Justice Amy Coney Barrett dismissed a similar case from a Wisconsin taxpayers’ group that tried to block the plan.
Biden’s loan forgiveness initiative has yet to begin due to a separate legal challenge brought forth by six Republican-led states that resulted in its pause by the 8th U.S. Circuit Court of Appeals. In the meantime, the Education Department encourages people to apply for relief, although they won’t receive immediate cancellation until the halt is lifted.
“Today’s temporary decision does not stop the Biden Administration’s efforts to provide borrowers the opportunity to apply for debt relief nor does it prevent us from reviewing the millions of applications we have received,” said U.S. Secretary of Education Miguel Cardona in a statement following the pause. “Amidst Republicans’ efforts to block our debt relief program, we are moving full speed ahead to be ready to deliver relief to borrowers who need the help.”
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Additionally, despite consistent legal pressure, the Education Department announced new changes to the program in the hopes of making it “simpler, fairer and more accountable.” The changes make it easier for those who have been defrauded by their institutions to receive relief through the borrower defense process, as well as provide protections and limits on the amount of interest that can be added to the debt.
“Today is a monumental step forward in the Biden-Harris team’s efforts to fix a broken student loan system and build one that’s simpler, fairer, and more accountable to borrowers,” Cardona said in a statement.
“These transformational changes will protect students who’ve been cheated by their colleges from the bureaucratic nightmares of the past and ensure that all our targeted debt relief programs live up to the promises made by Congress in the Higher Education Act. We’re also protecting borrowers from higher costs by limiting the practice of tacking unpaid student loan interest onto their principal balances.”
The changes will go into effect starting July 1, 2023.
