Biden Faces First Lawsuit Over Student Loan Forgiveness Plan

President Biden delivers remarks on student loan debt forgiveness on Aug. 24. - Photo: Demetrius Freeman/The Washington Post via Getty Images

(Axios) A public interest lawyer on Tuesday sued the Department of Education in an attempt to block President Biden’s student loan forgiveness plan.

Why it matters: The federal lawsuit is the first known major legal challenge to Biden’s plan, which has presented new political hurdles for the administration — and has drawn opposition from Republicans and some Democrats in battleground states.


Driving the news: The lawsuit is backed by the libertarian Pacific Legal Foundation and says that plaintiff Frank Garrison, an employee, “will face immediate tax liability from the state of Indiana because of the automatic cancellation of a portion of his debt.”

  • “Mr. Garrison and millions of others similarly situated in the six relevant states will receive no additional benefit from the cancellation—just a one-time additional penalty.”
  • The Pacific Legal Foundation also argues that Biden lacks the legal authority to introduce the student loan plan, Reuters notes.

State of play: The lawsuit says that Garrison has been working on getting his loans canceled through the Public Service Loan Forgiveness program, which are not considered taxable, per the government.

  • Garrison argues that Biden’s plan would subject him to local tax liability that he wouldn’t otherwise owe under the PSLF program.
  • “These taxes would not be owed for debt forgiveness under the Congressionally authorized program rewarding public service,” per the filing.

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