Conservative Groups sue Biden Administration over Student Debt Forgiveness Plan

August 7, 2023

Two conservative groups have filed suit against the Biden Administration over its plan to forgive some $39 billion in student debt from more than 800,000 borrowers. 

The suit, filed Friday in Michigan, is in response to a plan President Biden announced July 14 that followed a Supreme Court decision in June striking down Biden’s initial student loan forgiveness plan.

The new Biden policy would eliminate a borrower’s student debt if they have been making loan payments for 20 years or 25 years, depending on when they borrowed, and their loan and plan type.

The Biden Administration says that the “one-time adjustment” addresses fixes to the student loan system’s income-driven  repayment plans. Specifically, it’s meant to address a practice known as forbearance steering, in which student loan managers hired by the government wrongly pushed borrowers to go into forbearance—a temporary pause on payments because of hardship—even if they would have been better served by enrolling in an income-driven repayment plan.

Friday’s lawsuit was filed by the New Civil Liberties Alliance on behalf of the Mackinac Center for Public Policy and the Cato Institute. The two organizations are asking a judge to rule that the new Biden plan is illegal since it was not authorized by Congress. They’re further asking the judge to place an injunction against the Department of Education from carrying it out until their case is decided. 

The Education Department responded to the suit by calling it “a desperate attempt from right wing special interests to keep hundreds of thousands of borrowers in debt,” adding that the Administration will not “back down or give an inch when it comes to defending working families.”

The Cato Institute previously sued the Biden Administration over the student debt cancellation plan that was struck down by the Supreme Court.

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