Conservative groups have launched a national search for prospective plaintiffs to challenge the Biden administration’s federal student loan forgiveness order in short.
Why it matters: 43 million student borrowers eligible for relief could be stuck in financial limbo if the order becomes embroiled in drawn-out litigation.
What we’re watching: The Job Creators Network — a right-leaning small business group that’s advocated for lower taxes and fewer regulations — is preparing to file a lawsuit once the Department of Education unveils the website where borrowers can apply.
- They’ve tapped Karen Harned from the National Federation of Independent Business to lead a team vetting potential plaintiffs. She oversaw a recent legal bid to block certain COVID-19 vaccine workplace mandates.
- Americans for Tax Reform president Grover Norquist tells Axios his organization will either file its own lawsuit, team up with conservative think tanks or state attorneys general, or all of the above.
- One Oregon man who previously ran for US Senate as a Republican is representing himself in a lawsuit challenging Biden’s student loan plan in district court, arguing that the relief will worsen inflation and raise the interest expense on his mortgage.
State of play: The Biden administration last month announced plans to forgive $10,000 in student loans for individual borrowers who make under $125,000 per year, and $20,000 for those who have received Pell Grants.
- The administration has not yet rolled out the site where around 35 million borrowers will have to apply for forgiveness.
- The approximately eight million qualifying borrowers for whom the Department of Education already has income information will receive automatic debt relief.
Between the lines: One key challenge is proving that a plaintiff has the standing to sue in federal court.
- The Supreme Court has ruled that merely being a taxpayer does not provide the necessary standing to challenge an allotment of government funds alleged to violate the Constitution.
- “[Biden’s loan forgiveness plan] is unfair but you can’t take unfair to court,” said Job Creators Network president Alfredo Ortiz.
Zoom in: One path some groups are exploring is finding a plaintiff who is a private citizen earning just above the income threshold, or who put themselves through school while working and has already paid off their loans.
- Loan servicers might seek standing by arguing that the administration’s action led them to lose money they might otherwise have made.
- Some Republican state attorneys general, including Mark Brnovich in Arizona and Eric Schmitt in Missouri, have indicated early interest in arguing standingthough details are not yet clear.
What they’re saying: “Standing is a game of Whac-a-Mole,” Fordham University law professor Jed Shugerman told Axios. “If you’re the Biden administration you have to whack every mole” but when an advocacy group is looking for a plaintiff, “All you need is one entity with concrete and direct harm that is willing to sue.”
- Dalié Jiménez, professor of bankruptcy law at UC Irvine and director of the Student Loan Law Initiative, said legal challenges amount to an effort to intimidate people from applying for the relief in the first place.
- “Borrowers should continue to do as the department is asking them to do, which is to fill out the application until a court basically like says otherwise or prevents it from taking effect, Jiménez said.
The other side: The Biden administration says a 2003 law known as HEROES, the Higher Education Relief Opportunities for Students Act, allows it to waive federal student loans to support borrowers in an emergency, such as a natural disaster or war.
- HAS 25-page memo from the Justice Department lay out the administration’s legal justification, citing the “financial hardship arising out of the COVID -19 pandemic.”
- White House spokesperson Abdullah Hasan told Axios in response to this reporting: “Let’s be clear about what they would be trying to do here: The same folks who voted for a $2 trillion tax giveaway for the rich and had hundreds of thousands of dollars of their own small business loan debt forgiven would be trying to keep millions of working middle-class Americans in mountains of debt.”