Wisconsin law firm sues to block student loan forgiveness

MADISON, Wis. (AP) — A conservative Wisconsin law firm on Tuesday sued to stop federal student loan forgiveness, saying President Joe Biden’s loan forgiveness plan is discriminatory and constitutes taxation without representation.

The Wisconsin Institute for Law and Liberty’s federal lawsuit asks a judge to immediately block student loan forgiveness until the lawsuit plays out.

“We think that that’s just a breathtaking usurpation of congressional authority to tax and spend, and we’re not going to stand idly by while he does this,” said Dan Lennington, Deputy Council at the Wisconsin Institute for Law and Liberty and one of the attorneys on the suit.

Biden enacted the debt relief plan under the HEROES Act, which was passed after the Sept. 11 attacks sparked an American-led military campaign aimed at terrorism. The act gave the executive branch authority to forgive student loan debt in association with military operations or national emergencies.

The president cited COVID-19 as reason to invoke the act, a move the Wisconsin Institute for Law and Liberty’s complaint argues is an overextension of executive power that improperly circumvents Congress.

“We believe that this principle is important no matter who’s in the White House and that a president cannot create law by himself or herself,” said Lennington. “We’re very troubled by this, and it’s setting a horrible precedent if we let the president get away with this.”

The complaint also alleges that Biden’s plan is discriminatory because he has said it will help to “narrow the racial wealth gap” and support Black borrowers.

“The idea there is that our laws, our constitution, need to be color blind and that you cannot have a motivation for a program to help one race, even a minority race, a disadvantaged race, in the same way that you couldn’t say that the purpose of a program was to help white borrowers. They’re equally unconstitutional and illegal,” Lennington said.

A White House spokesperson did not immediately respond to requests for comment on the lawsuit, But White House press secretary Karine Jean-Pierre addressed resistance to loan forgiveness in a briefing on Tuesday.

“It’s a shame that you have Republicans out there – Republican groups, Republican states that are trying to stop Americans from getting a little bit of a breathing room,” she said, adding, “We’re talking about 40 million Americans that could benefit from getting student loan relief. It is shameful that they are siding with the special interests. It is shameful that they are not siding with the American people on this.”

WILL filed the suit on behalf of the Brown County Taxpayers Association against Biden, Education Secretary Miguel Cardona, the Department of Education and the Office of Federal Student Aid and its chief operating officer.

Similar lawsuits have been filed in other states. In Indiana, a libertarian group is arguing that Biden’s plan creates additional tax burdens for students who would have their loans forgiven by other means. Six Republican-led states also filed a lawsuit in Missouri last week raising specific objections to loan forgiveness for federal loans that are owned by private banks. The Biden administration quickly removed eligibility for the estimated 770,000 borrowers with such loans.

Lennington says this lawsuit is unique to others that have been filed because of the taxpayer perspective.

“Our lawsuit is unique because we’re claiming that as taxpayers, our clients are particularly harmed because of the damage that’s going to be caused, the taxes they’re going to have to pay, the inflation, the damage to the U.S. economy, and that under the doctrine of taxpayer standing, which is a very narrow doctrine, that our clients meet the test and can actually challenge this in court.”

UW Madison law professor Howard Schweber says he thinks the suit might have teeth.

“This gets to a basic separation of powers question,” said Schweber. “With the current version of the Roberts court, I think that it’s quite possible that if this goes to the Supreme Court, the challengers might win.”

The Department of Education estimates that student loan cancellation alone will cost around $300 billion over the next decade. But an analysis by the University of Pennsylvania, cited in WILL’s lawsuit, projects a cost of up to $519 billion and says that could exceed $1 trillion depending on details that haven’t been released yet.

The one-time loan forgiveness plan includes income requirements aimed at low- and middle-income families. It provides up to $20,000 in debt relief to students who received a Pell Grant and up to $10,000 in assistance to students who did not. The Biden administration has said applications for loan forgiveness will open in October, but officials have yet to provide a specific date. Applications will be accepted through Dec. 31.

Associated Press writer Seung Min Kim contributed to this report from Washington. News 3 Now’s Braden Ross also contributed to this report.

Harm Venhuizen is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Venhuizen on Twitter.