A plan by the Biden administration to cancel $39 billion in student loans has been challenged by a pair of conservative nonprofits that say the idea is an overstep of power and that the Department of Education has “no authority” to manipulate the payment history of borrowers, the latest in a series of legal challenges that claim student loan forgiveness isn’t within the purview of the executive branch....
The Biden administration in July said it would automatically forgive the debts of 804,000 Income-Driven Repayment plan borrowers because of administrative errors that failed to account for some of the lenders’ payments over time. Borrowers under IDR plans are supposed to have their loans forgiven after 20 or 25 years, but the Department of Education said some payments were not counted toward the promised expiration date and the newly proposed “one-time adjustment” will allow three years of past nonpayment to count as if borrowers had been making payments all along.as many as 3.
The DOE said it would begin notifying eligible borrowers within weeks of the July 14 announcement, but the new lawsuit asks a judge to halt the notifications under the claim the plan violates the appropriations clause of the Constitution. The plan would also apply to people enrolled in Public Service Loan Forgiveness, a program that allows debt to be canceled after 10 years of payments if the borrower works in a government or nonprofit job, but the lawsuit says earlier cancelation is illegal because it wasn’t approved by Congress and its statute requires borrowers make “monthly payments” throughout that 10-year period.