Lawyer Sues to Halt Biden’s Student Debt Forgiveness – Even as He’s About Have His Erased by a Separate Federal Program

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An Indiana lawyer with student loan debt is suing in federal court to stop the implementation of President Joe Biden’s debt forgiveness plan. While that may seem self-defeating, the man in question is slated to have his debt forgiven through a separate government program. Moreover, the lawyer would incur an automatic tax liability on the forgiven debt because Indiana considers it taxable.

In August, Biden announced he’s canceling $10,000 in student debt for borrowers making less than $125,000. Those who received Pell Grants will get $20,000 in relief.

Conservatives criticized the move, with some such as Sen. Ted Cruz (R-TX) exploring ways to potentially sue to stop the move. However, the issue of who or what entity has standing to sue could prove problematic for plaintiffs.

In this case, the plaintiff is Frank Garrison of Indiana, which is one of a handful of states that plan on taxing forgiven student debt. According to the Associated Press, Indiana will tax the vacated debt at a rate of 3.23%, or $323 on $10,000 in relief.

Garrison is being represented by Pacific Legal Foundation, according to Fortune, which reported:

Garrison is on track to get his student debt erased through a separate federal program for public servants. Although most borrowers will need to apply for Biden’s plan, Garrison and many others in that program will automatically get the relief because the Education Department has their income information on file.

Biden’s plan would automatically cancel $20,000 of Garrison’s debt, which in turn would trigger an “immediate tax liability” from the state of Indiana, according to the suit. Under the debt forgiveness program he’s enrolled in now, canceled debt cannot be taxed.

The suit maintains that “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.”

“Congress did not authorize the executive branch to unilaterally cancel student debt,” said an attorney representing Garrison.

“Nothing about loan cancellation is lawful or appropriate,” the suit says. “In an end-run around Congress, the administration threatens to enact a profound and transformational policy that will have untold economic impacts.”