Judge denies student debt cancellation lawsuit after Education Department clarifies plan

A federal judge on Thursday denied a challenge to President Biden’s student debt forgiveness plan filed by the Pacific Legal Foundation (PLF).

PLF on Tuesday became the first organization to challenge the Biden administration’s move to forgive up to $20,000 in student debt per borrower, alleging it is illegal because Congress, which holds the power of the purse, did not approve it.

The group filed the suit on behalf of one of its attorneys, alleging he would suffer irreparable harm because the plan would automatically forgive his debt and force him to face state tax liability.

“Nearly 8 million borrowers may be eligible to receive relief automatically because their relevant income data is already available to the Department,” read a White House fact sheet cited in the suit.

But the judge on Thursday denied the motion after the Department of Education updated its website to clarify no one would be forced to take part in the debt forgiveness, a clarification that came after the department cast the lawsuit as “baseless” for claiming they would.

“If you would like to opt out of debt relief for any reason, including because you are concerned about a state tax liability, you will be given an opportunity to opt out,” the department’s website reads after Wednesday’s update.

U.S. District Court Judge Richard Young ruled that the PLF attorney can no longer be irreparably harmed by the policy since he can now opt out, throwing out his motions for a temporary restraining order and preliminary injunction to halt Biden’s plan.

Young also granted PLF’s request to amend its complaint following the ruling. 

The judge asked PLF to consider in its new filing if it has standing to file a lawsuit. He also noted that the Education Department’s plan is “still evolving” and asked PLF to consider if the case is ready to be adjudicated.

“Since Pacific Legal Foundation filed the case on Tuesday, the government has made two staggeringly large changes to the program via quiet revisions to a Department of Education website, which only serves to underscore the lawless nature of this program,” PLF attorney Caleb Kruckenberg said in a statement. “The government clearly had not considered the implications of the program for people like our plaintiff, Frank Garrison.”

The department’s website was also updated on Thursday to exclude borrowers with privately held federal student loans.

The group promised to continue challenging the debt forgiveness plan.

“None of these on-the-fly changes can remedy the fact that the entire program is brazenly illegal from top to bottom,” said PLF attorney Michael Poon. “At no point has the government made a plausible argument that the underlying policy is legal. So far, they have not challenged our argument that the administration’s ‘lawmaking by press release’ is unconstitutional.”

The Hill has reached out to an Education Department spokesperson for comment.

Meanwhile, six Republican-led states on Thursday filed a separate suit challenging the debt forgiveness plan.