8/7/23 - Conservative Groups File Lawsuit To Block Loan Forgiveness

A lawsuit was filed in Michigan to block a plan that would cancel student loans.

-On Friday, a lawsuit was filed in Michigan that asks a federal court to block the Biden administration's plan to cancel $39 billion in student loans for more than 800,000 borrowers.

The lawsuits were filed by the New Civil Liberties Alliance on behalf of the Mackinac Center for Public Policy and the Cato Institute. 

The groups argue that the administration overstepped its power when it announced the forgiveness.  That was just weeks after the Supreme Court struck down a broader cancellation plan supported by President Biden.

President Biden has said he will pursue a different cancellation plan after the Supreme Court decision, and his administration is separately unrolling a generous repayment plan.

The Biden administration announced July 14 that it would soon forgive loans for 804,000 borrowers enrolled in income-driven repayment plans. The plans have long offered cancellation after borrowers make 20 or 25 years of payments, but “past administrative failures” resulted in inaccurate payments counts that set borrowers back on their progress toward forgiveness, the department said.

The conservative groups say President Biden’s plan undercuts Public Service Loan Forgiveness.                                                                                The Mackinac Center and Cato Institute say they employ borrowers who are working toward student loan cancellation through the program. They say Biden’s action illegally accelerates progress toward relief, diminishing the benefit for nonprofit employers. “This unlawful reduction in the PSLF service requirement injures public service employers that rely on PSLF to recruit and retain college-educated employees,” the suit alleges.

The pause on student loan payment is scheduled to end this fall and payments are set to resume October 1.