Conservative groups contest latest Biden student loan forgiveness plan

Conservative groups are suing the U.S. Department of Education over President Biden’s latest student-loan debt forgiveness plan, which was rolled out after the Supreme Court struck down Biden’s initial plan. 

In a complaint filed Friday in a federal district court in Michigan, the Cato Institute and the Mackinac Center for Public Policy argued the Biden administration overstepped its authority by announcing the plan and asked the judge to block the Education Department from rolling out the forgiveness plan until the case is decided.

The Education Department called the challenge to the plan “a desperate attempt from right wing special interests to keep hundreds of thousands of borrowers in debt,” the Associated Press reported. 

“We are not going to back down or give an inch when it comes to defending working families,” the department said, according to the AP.

The Biden administration’s new plan, announced on July 14, would effectively forgive $39 billion in loans for 804,000 borrowers enrolled in the Income-Driven Repayment plans. 

These plans have long offered loan forgiveness after 20 or 25 years of payments, but the administration claims that “past administrative failures” have caused inaccurate payment counts, setting borrowers back a number of years that could have counted toward their years of repayment needed for forgiveness. 

The new plan, referred to as a “one-time account adjustment” counts some periods of nonpayment as periods of repayment, pushing 804,000 borrowers over the threshold for forgiveness. The plan would also count toward the Public Service Loan Forgiveness program, offering cancelation for those working in a government or nonprofit job after 10 years of payments.

“No authority allows the Department to count non-payments as payments,” the lawsuit claims.

“The inescapable conclusion is that the One-Time Account Adjustment is substantively and procedurally unlawful,” the lawsuit says, adding, “The Court should declare this forbearance-credit scheme unlawful, set it aside, and enjoin any cancellation of student loans based on it.” 

The New Civil Liberties Alliance, which brought the lawsuit on behalf of the groups, is arguing against the pace at which the administration has rolled out its plan.

NCLA litigation counsel Sheng Li said the repayment plans’ statutes “require borrowers to make a certain number of monthly payments before earning forgiveness. By trying to count non-payments as payments, the strategy seems to be to cancel $39 billion faster than a court can review and stop this blatantly unlawful act.”