Hoosier lawyer is lone plaintiff in lawsuit to block student debt cancellation plan

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An Indiana attorney who claims to qualify for the Biden administration’s student loan forgiveness plan is challenging the debt relief, asserting he will face a state tax liability and be worse off because of the U.S. Department of Education’s “end-run around Congress.”

Frank Garrison, the sole plaintiff in Frank Garrison v. U.S. Department of Education and Miguel Cardona, in his official capacity as U.S. Secretary of Education, resides in Indiana and is a staff attorney for the Pacific Legal Foundation in Arlington, Virginia.  He is being represented by the Pacific Legal Foundation in the lawsuit filed Tuesday in the U.S. District Court for the Southern District of Indiana.

Garrison asserts he and borrowers in at least six states will incur additional financial obligations because their canceled debt will be counted as income and taxed by their states.

Caleb Kruckenberg, one of two attorneys at Pacific Legal Foundation who signed the complaint, chided the Biden administration’s program in a press release announcing the lawsuit.

“Congress did not authorize the executive branch to unilaterally cancel student debt,” Kruckenberg stated. “It’s flagrantly illegal for the executive branch to create a $500 billion program by press release and without statutory authority or even the basic notice and comment procedure for new regulations.”

Garrison’s complaint argues the forgiveness program is invalid because the White House exceeded its statutory authority and violated the separation of powers as provided by the Constitution.

The complaint does not specify how much Garrison owes but it claims he paid for his college education using federal student loans and Pell Grants. Under the plan to alleviate student loan debt, Garrison would have $20,000 of his financial obligation automatically canceled, the complaint states.

However, since Indiana would count the relief as taxable income, Garrison states he will face a state income tax liability of more than $1,000 for the year 2022.

Moreover, he claims, the $20,000 reduction will “not change either his monthly repayment obligation or the total amount of the loans he must repay” because he already qualifies for the income-drive repayment and intends to seek relief under the Public Service Loan Forgiveness program.

In August, President Joe Biden announced his plan to reduce the burden of student loans. The plan would forgive up to $10,000 in federal student loan debt and up to $20,000 in debt to Pell Grant recipients. Borrowers would be eligible for this relief if their individual income is less than $125,000 or $250,000 for households.

An estimated 40 million borrowers would receive this relief, including about 856,400 in the state of Indiana, according to the complaint.

Garrison asserts “such an economically and politically significant action” as the student loan forgiveness plan requires a “clear authorization by Congress.” He is asking the court to issue a declaratory judgment and permanent injunction against the plan.

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