Lawsuit Targets Student Debt Cancellation Policy

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A lawyer working for a libertarian legal group has filed a federal lawsuit against the U.S. Department of Education over President Biden’s policies to cancel large amounts of student debt. 

Frank Garrison, an Indiana resident who works for the Pacific Legal Foundation, alleges that Biden’s plan to automatically cancel the debt of some borrowers would force him to pay state taxes on his forgiven debt. Garrison, who has been attempting to have his loans forgiven through the Public Service Loan Forgiveness Program, contends that he would have avoided paying any federal or state taxes on his debt if he had received relief through the program. Although federal taxes cannot currently be levied on debt relief, seven states including Indiana have enacted taxation policies on forgiven federal loans. 

The White House pushed back against the suit, stating that borrowers can opt out of debt relief.

“No one will be forced to get debt relief,” a White House spokesman, Abdullah Hasan, told The New York Times. “Anyone who does not want debt relief can choose to opt out. Why would this group bring this baseless claim? Because opponents of the debt relief plan are trying anything they can to stop this program that will provide needed relief to working families.”

Senior attorneys at the legal foundation admitted that Garrison’s case will be much more difficult to argue given that he can choose not to receive federal debt relief.