President Biden's Student Loan Forgiveness Plan Is Facing Its First Legal Roadblock

Daniella Cressman

Disclaimer: This information is accurate and true to the best of my knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

There have been rumors and suspicions swirling that canceling student loan debt is not quite as straightforward as President Biden implied—or at least hoped—it would be: needless to say, quite a few loan providers are livid that they might not get the money they lent to students back in the way they had hoped. The first legal challenge has ensued: a new lawsuit is alleging that the program is unfair to many Americans who will now be forced to pay taxes on their debt which has been forgiven—the Pacific Legal Foundation, a libertarian legal foundation, filed this complaint on Tuesday in Indiana. The lawsuit aims to block President Biden's recently announced student relief initiative, which would cancel up to $10,000 in federal student loan debt for folks who earn less than $125,000 per year and up to $20,000 for folks who received a need-based Pell Grant in order to attend university.

This lawsuit comes on the toes of the announcement earlier this week that it will cost the federal government no less than $4 billion to fund the student loan forgiveness program.

"The lawsuit comes after the Congressional Budget Office released an analysis earlier in the week estimating the plan will cost the federal government $400 billion to implement." —Pete Grieve

Some conservative groups have also argued that President Biden may not have the authority to cancel student loan debt without congressional approval. However, the Biden administration has claimed that it can indeed cancel federal student debt under an act that gives the president powers to alleviate hardship for borrowers in the event of a national emergency. Biden has declared that the COVID-19 pandemic is officially over while simultaneously saying that his federal student loan debt relief program is justified due to an ongoing national emergency...

Some legal experts have said that this case could ultimately end up in the Supreme Court, which would extend the timeline of the actual student loan debt forgiveness significantly.

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Canadian-American author writing about local politics, personal finance, & dining in Albuquerque.

Albuquerque, NM

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