Two conservative groups are asking a federal court to block the Biden administration’s plan to cancel $39 billion in student loans for more than 800,000 borrowers.
In a lawsuit filed Friday in Michigan, the groups argue that the administration overstepped its power when it announced the forgiveness in July, just weeks after the Supreme Court struck down a broader cancellation plan pushed by President Joe Biden.
It asks a judge to rule the cancellation illegal and stop the Education Department from carrying it out while the case is decided. The suit was filed by the New Civil Liberties Alliance on behalf of the Mackinac Center for Public Policy and the Cato Institute.
The Education Department called the suit “a desperate attempt from right wing special interests to keep hundreds of thousands of borrowers in debt.”
It’s part of a wave of legal challenges Republicans have leveled at the Biden administration’s efforts to reduce or eliminate student debt for millions of Americans. Biden has said he will pursue a different cancellation plan after the Supreme Court decision, and his administration is separately unrolling a more generous repayment plan that opponents call a “backdoor attempt” at cancellation.
The conservative groups say Biden’s plan undercuts Public Service Loan Forgiveness. The Mackinac Center and Cato Institute say they employ borrowers who are working toward student loan cancellation through the program. They say Biden’s action illegally accelerates progress toward relief, diminishing the benefit for nonprofit employers.
“This unlawful reduction in the PSLF service requirement injures public service employers that rely on PSLF to recruit and retain college-educated employees,” the suit alleges.
The Cato Institute previously sued the administration over the cancellation plan that was struck down by the Supreme Court. The Mackinac Center is separately challenging Biden’s pause on student loan payments, which is scheduled to end this fall with payments resuming Oct. 1.