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Lawsuit Filed to Stop Biden’s Student Loan Bailout

Lawsuit Filed to Stop Biden’s Student Loan Bailout

“filed a temporary restraining order to prevent the loan handout from going into effect”

I suspect there will be more like this to follow. There certainly should be.

FOX News reports:

First lawsuit filed to block Biden’s student loan handout

A public interest attorney filed a lawsuit Tuesday morning against the Department of Education to block President Biden’s “illegal” move to cancel more than $500 billion in student loan debt.

Biden, last month, announced that he would cancel $10,000 of federal student loan debt for certain borrowers making less than $125,000 per year, and up to $20,000 for Pell Grant recipients.

Frank Garrison, an attorney at Pacific Legal Foundation, brought the suit against the Department of Education Tuesday in the U.S. District Court for the Southern District of Indiana.

Garrison and his attorneys at the Pacific Legal Foundation filed a temporary restraining order to prevent the loan handout from going into effect.

Garrison qualifies for the congressionally authorized Public Service Loan Forgiveness program, meaning he will receive debt forgiveness after making 10 years of payments on his student loans.

The Biden administration’s new handout would stick Garrison with a new state tax bill which he would not have under his existing PSLF program, as Indiana plans to tax the upcoming student loan cancelation as income.

His lawyers argue Garrison “will be stuck with a tax bill that makes him financially worse off than continuing with his repayment program under PSLF.”

“He did not ask for cancelation, doesn’t want it, and has no way to opt out of it,” the Pacific Legal Foundation said in a release Tuesday.

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Comments

Morning Sunshine | September 28, 2022 at 2:32 pm

I would like to join a class action suit against this as a person who responsibly paid off my loans. I would like 10k back, if you please.

I expect the courts to dispose of this like they do any time a lawsuit they don’t like that has at least some merit shows up: assert the plaintiffs don’t have standing.

    Dimsdale in reply to randian. | September 29, 2022 at 9:12 pm

    Biden doesn’t have the standing to cancel those debts.

    Why is it that, like everything else, the Democrat socialists are destroying the legal concept of contracts.

The lawsuit highlights the legal concept of “choice” and “intent of the parties.” When someone takes out a loan, typically they have the expectation of paying a specified amount over a period of years. Loan terms include aceleration and cancelation provisions.

If the federal government cancels the loan without the borrower’s concent outside the terms of the loan agreement, then the borrower faces an expected tax burden in the year of cancelation rather than the small payments over the life of the loan. Depending upon the tax rate and the loan interest rate, the borrower could be economically better off with the loan than with the cancelation.

I believe the original purpose of loan cancelation — to address rip-offs by proprietary schools that lied about their career opportunities — was fair. But it was structured with an element of choice.

I had about $8,000 in student debt when I graduated. Unfortunately, I had a degree in something that was useful enough to get a job and was responsible enough to pay back what I borrowed. Sucks for me, I guess

The $10,000, $20,000 forgiveness numbers simply obfuscate the Department of Education regulatory capture eliminating unlimited loan balances.

    BierceAmbrose in reply to FarOutWest. | September 29, 2022 at 3:23 pm

    Indeed. It’s weird that the most fundamentally capitalist activity I can think of has to be so scaffolded to hold it up. Invest now for more later is the whole scheme, no? How’s that working out for them?

    It’s the same with a degree as a signaling badge to get into the rake-off class. Invest now, for more payoff later that makes the delayed gratification worth it. Badge for more rake-off later seems to be working out better for them than “improve your later life, by making yourself more productive.” It’s not like our credentialed cadre is actually making better choices steering themselves or the rest of us.

    The same capitalist argument goes for us funding others’ higher-ed. We get a slice of their greater production — in an ironic transposition of the ‘free market success raises all boats’ argument, OR we get more, better, faster because the orchestrating overlords are that much smarter.

    How’s that working out for us, these days?

    They do complain if their Ponzi “investment” scheme does not work out for them. They seem to be bad capitalists. Maybe to start don’t gamble with the rent money. Just sayin.

Don’t these people owe their loans to a different branch of government? As far as I know, They owe the money to Congress. How can the president cancel a loan owed to someone else?