Lawsuit seeks to stop Biden’s student loan forgiveness plan

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An Indiana public interest attorney is suing to block President Biden’s plan to forgive some student debt, arguing the policy will force him to pay taxes on the forgiven amount.

The lawsuit, filed Tuesday in U.S. District Court for the Southern District of Indiana, is the first major lawsuit seeking to strike down Biden’s policy before it takes effect.

The Pacific Legal Foundation, the conservative California public interest law firm supporting the new lawsuit, asserts that the executive branch does not have the power to create a new pardon policy and usurps the power of Congress to legislate. Plaintiff Frank Garrison works for the foundation.

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The argument is consistent with other objections to Biden’s plan, but the foundation may have the one thing legal experts have said is needed to present a legitimate case, a client with standing to sue.

Garrison said he is working to have its federal student loans forgiven through a program that erases public servants’ debt after 10 years of payments and service. Participants in this utility loan forgiveness program do not have to pay federal or state taxes. However, Biden’s plan could require borrowers in several states, including Indiana, to pay local tax bills.

Since Biden’s plan would be take effect before Garrison’s debt is canceled under the public service program, garrison said he expects to pay more than $1,000 in state income taxes for the $20,000 of canceled debt.

Republican state attorneys general and lawmakers have explored the possibility of a lawsuit against Biden’s pardon plan, and the Job Creators Network has pledged to sue the administration once Department of Education guidelines will have been published.

This is a developing story and will be updated.