Wisconsin law firm sues to block student loan forgiveness

Tuesday, October 04, 2022

MADISON, Wis. (AP) – A conservative law firm in Wisconsin filed a lawsuit on Tuesday to end federal student loan forgiveness, saying President Joe Biden’s loan forgiveness plan was discriminatory and an imposition without representation.

The Wisconsin Institute for Law and Liberty’s federal lawsuit asks a judge to immediately freeze student loan forgiveness until the trial proceeds.

“The president does not have the power to order a massive student loan forgiveness, costing taxpayers up to a trillion dollars. If this plan is right for America, it’s up to Congress to decide” , said Rick Esenberg, president of the institute.

Biden signed into law the debt relief plan under the HEROES Act, which was passed after the September 11 attacks sparked a US-led military campaign targeting terrorism. The act gave the executive branch the power to cancel student loan debt in association with military operations or national emergencies.

The president cited COVID-19 as a reason to invoke the law, a move that the Wisconsin Institute for Law and Liberty’s complaint says is an overextension of executive power that improperly circumvents Congress. The complaint also alleges that Biden’s plan is discriminatory because he said it will help “narrow the racial wealth gap” and support black borrowers.

A White House spokesperson did not immediately respond to requests for comment on the lawsuit, but White House press secretary Karine Jean-Pierre addressed resistance to loan forgiveness during a a briefing on Tuesday.

“It’s too bad there are Republicans out there — Republican groups, Republican states trying to keep Americans from getting some breathing room,” she said, adding, “We let’s talk about 40 million Americans who could benefit from getting student loan relief It’s shameful that they side with special interests It’s shameful that they don’t side with the American people on this subject.

WILL sued on behalf of the Brown County Taxpayers Association against Biden, Education Secretary Miguel Cardona, the Department of Education and Office of Federal Student Assistance and its chief executive.

Similar lawsuits have been filed in other states. In Indiana, a libertarian group argues that Biden’s plan creates additional tax burdens for students who would otherwise have their loans canceled. Six Republican-led states also filed a lawsuit in Missouri last week, raising specific loan forgiveness objections for federal loans held by private banks. The Biden administration quickly removed the eligibility of an estimated 770,000 borrowers for such loans.

The Department of Education estimates that student loan forgiveness alone will cost about $300 billion over the next decade. But an analysis from the University of Pennsylvania, cited in WILL’s lawsuit, predicts a cost of up to $519 billion and says it could exceed $1 trillion based on details that have yet to be released.

The one-time loan forgiveness plan includes income requirements aimed at low- and middle-income families. It provides up to $20,000 in debt relief for students who received a Pell grant and up to $10,000 in aid for students who did not. The Biden administration has said applications for loan forgiveness will open in October, but officials have not yet provided a specific date. Applications will be accepted until December 31.


Associated Press writer Seung Min Kim contributed to this report from Washington.

Harm Venhuizen is a member of the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places reporters in local newsrooms to report on underreported issues. Follow Venhuizen on Twitter.

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