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Inside preparations to challenge Biden’s education loan forgiveness

Conservative groups have launched a national seek out prospective plaintiffs to challenge the Biden administration’s federal education loan forgiveness order in court.

Why it matters: 43 million student borrowers qualified to receive relief could possibly be stuck in financial limbo if the order becomes embroiled in drawn-out litigation.

What we’re watching: THE WORK Creators Network a right-leaning small company group that’s advocated for lower taxes and fewer regulations is getting ready to file case after 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 recently available 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 lawsuit, synergy with conservative think tanks or state attorneys general, or all the above.
  • One Oregon man who previously ran for U.S. Senate as a Republican is representing himself in case challenging Biden’s education loan plan in district court, arguing that the relief will worsen inflation and improve the interest expense on his mortgage.

State of play: The Biden administration last month announced plans to forgive $10,000 in student education loans for individual borrowers who make under $125,000 each year, and $20,000 for people who have received Pell Grants.

  • The administration have not yet rolled out the website where around 35 million borrowers will need to make an application for forgiveness.
  • The approximately eight million qualifying borrowers for whom the Department of Education already has income information will receive automatic credit card debt relief.

Between your lines: One key challenge is proving a plaintiff gets the standing to sue in federal court.

  • The Supreme Court has ruled that merely being truly a taxpayer will not supply the necessary standing to challenge an allotment of government funds purported to violate the Constitution.
  • “[Biden’s loan forgiveness plan] is unfair nevertheless, you can’t take unfair to court,” said Job Creators Network president Alfredo Ortiz.

Zoom in: One path some groups are exploring is getting a plaintiff who’s an exclusive citizen earning right above the income threshold, or who put themselves through school while working and contains already paid their loans.

  • Loan servicers might seek standing by arguing that the administration’s action led them to reduce money they could otherwise have made.
  • Some Republican state attorneys general, including Mark Brnovich in Arizona and Eric Schmitt in Missouri, have indicated early fascination with arguing standing, though details aren’t yet clear.

What they’re saying: “Standing is really a game of Whac-a-Mole,” Fordham University law professor Jed Shugerman told Axios. “If you are the Biden administration you need to whack every mole” however when an advocacy group wants a plaintiff, “All you have to is one entity with concrete and direct harm that’s ready to sue.”

  • Dali Jimnez, professor of bankruptcy law at UC Irvine and director of the EDUCATION LOAN Law Initiative, said legal challenges total an attempt to intimidate folks from trying to get the relief to begin with.
  • “Borrowers should continue steadily to do because the department is asking them to accomplish, that is to complete the application form until a court basically like says otherwise or prevents it from taking effect, Jimnez said.

Another side: The Biden administration says a 2003 law referred to as HEROES, the bigger Education Relief Opportunities for Students Act, allows it to waive federal student education loans to aid borrowers within an emergency, like a natural disaster or war.

  • A 25-page memo from the Justice Department lays out the administration’s legal justification, citing the “monetaray hardship arising from the COVID -19 pandemic.”
  • White House spokesperson Abdullah Hasan told Axios in reaction to this reporting: “Let’s be clear in what they might be attempting to do here: Exactly the same people that voted for a $2 trillion tax giveaway for the rich and had thousands of dollars of these own small company loan debt forgiven will be attempting to keep an incredible number of working middle-class Americans in mountains of debt.”

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