Small business group files suit over Biden student loan plan

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WASHINGTON — A small-business advocacy group has filed a new lawsuit seeking to block the Biden administration’s efforts to forgive student loan debt for tens of millions of Americans — the latest legal challenge to the program.

The Job Creators Network Foundation filed Monday a suit claiming that the Biden administration failed to seek public input regarding the program. This is one of several lawsuits filed by Republican lawmakers, attorneys, and conservative business groups in recent weeks. The suit claims that the Biden administration failed to seek public input on the program.

Elaine Parker, president of Job Creators Network Foundation, slammed the program as executive overreach and complained that it does nothing to address the root cause of rising debt: the “outrageous increase in college tuition that outpaces inflation every single year.”

“This bailout is going to affect everyone in this country because of the mass size of the program,” she said. “Everyone should have the chance to voice their opinions to the government.” She added: “These universities need to be held accountable for this student debt crisis.”

The Job Creators Network Foundation has previously turned to the courts to try to to block the Biden administration’s COVID-19 vaccine mandate on businesses. It also sued Major League Baseball in 2021 over the move of the All-Star game from Atlanta due to objections to changes in Georgia’s voting laws. The lawsuit, which claimed losses to local businesses was dropped later.

The new lawsuit is one of a growing number of legal challenges trying to halt the proposal laid out by President Joe Biden in late August to cancel up to $20,000 in debt for certain borrowers.

Six Republican-led states filed suit last month accusing the Biden administration, along with the Pacific Legal Foundation, an advocacy group based in Sacramento, California, of overstepping their executive powers. The lawsuit was filed in Indiana federal court. It claims that the plan is an illegal overreach and would increase tax burdens on some Americans who are able to forgive their debt.

Meanwhile, a federal judge in Wisconsin last week dismissed a lawsuit from a local taxpayers group, the Brown County Taxpayers Association, that sought to block the program, ruling that the group didn’t have standing to bring the lawsuit. The group claimed that Biden’s order illegally circumvented Congress’ power over spending and that the plan was discriminatory as it sought to help borrowers of color. The latest lawsuit was filed in the U.S. District Court for Texas against the U.S. Education Department’s secretary, Miguel Cardona. It focuses on how the plan was created. It claims that the Biden administration broke the Administrative Procedure Act’s notice and comment procedures. It also challenges the legal justification of the program by the administration.

The suit contains two plaintiffs. One who is not eligible for debt forgiveness due to the plan’s exclusion of commercially held loans not in default and one who was not granted a Pell grant, but is entitled to less debt forgiveness under this plan. The lawsuit states that the Department created a new Debt Forgiveness program that will impact tens to millions of Americans and cost hundreds upon billions of dollars. “Instead of providing notice and seeking comment from the public, the Department hammered out the critical details of the Program in secret and with an eye toward securing debt forgiveness in time for the November election.”

It also alleges the department “made numerous arbitrary decisions about the Program, including which individuals will receive debt forgiveness, how much of their debt will be forgiven, and which types of debt will qualify for the Program.”

“The result of this arbitrariness is predictable: some will benefit handsomely, some will be shortchanged, and others will be left out entirely,” it reads.

The case was assigned by U.S. District Judge Reed O’Connor who most notably ruled that the Affordable Care Act was not constitutional. Last year, the Supreme Court reversed this decision. O’Connor, a former President George W. Bush appointee, has also ruled against other policies pursued under Democratic administrations. He ruled last month that an ACA provision that required coverage for HIV prevention drugs violated a Texas employer’s religious beliefs.

Civil lawsuits filed in the federal court in Fort Worth have a 90% chance of going either to O’Connor or Judge Mark Pittman, an appointee of former President Donald Trump, according to a 2020 order of the court. The

White House spokesperson Abdullah Hasan issued a statement in defense of the loan forgiveness program.

” While opponents to our plan are siding in special interests and trying to keep millions of Americans in debt, President Obama and his Administration are fighting for middle-class families some breathing space as they recover from the pandemic. They will resume loan payments in January.” he stated in a statement.

The Biden debt forgiveness program will cancel $10,000 in student loan debt for individuals making less than $125,000 a year or households making less than $250,000. Pell grant recipients, who typically demonstrate more financial need, will be eligible for an additional $10,000.

The Biden administration used an act passed after the Sept. 11, 2001, terrorist attacks as legal justification for the program. According to an August legal opinion, the Justice Department stated that the law gives the administration “sweeping authority” to reduce or eliminate student loans during national emergencies. The administration cited the COVID-19 pandemic as its emergency.

The Congressional Budget Office estimates that the program will cost taxpayers $400 trillion over the next three decades.

—— Associated Press writers SeungMin Kim and Mark Sherman contributed to the report.

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