Chris Lange, FISM News
[elfsight_social_share_buttons id=”1″]
Two nonprofit groups are challenging the Biden administration’s “unlawful pause” on federal student loan payments they claim has cost American taxpayers $150 billion in lost interest.
The lawsuit was filed in the U.S. District Court for the Eastern District of Michigan by the New Civil Liberties Alliance (NCLA) and the Mackinac Center for Public Policy.
The complaint does not deny that Congress lawfully suspended loan payments and interest accrual on federally held student loans for six months during the COVID-19 pandemic. Plaintiffs, however, assert that eight subsequent extensions implemented by Education Secretary Miguel Cardona, who is named in the suit along with the Department of Education, were done so “without any lawful basis or congressional appropriation.”
Plaintiffs argue that the Education Department “has repeatedly extended the suspension for 30 months beyond its statutory expiration date and counting — at enormous expense to taxpayers.” These prolongations, they assert, were implemented on the flimsy basis of “an ever-shifting foundation of purported legal justifications.”
The court filing noted that the Biden administration initially relied on economic hardship provisions in the Higher Education Act to justify the extensions, then “pivoted to the HEROES Act of 2003.” Ultimately, the administration “stopped citing legal authorities altogether” and ceased “publishing new extensions in the Federal Register” altogether. The complaint further states that the Education Department “most recently claimed (falsely) that it had been relying on the HEROES Act,” adding: “None of these justifications holds water.
BIDEN ADMINISTRATION USURPED CONGRESSIONAL AUTHORITY
NCLA attorney Sheng Li explained that, since the initial six-month loan repayment and interest pause was established by an Act of Congress, only Congress has the authority to authorize extensions.
“The Administrative State lacks the power to extend a debt-relief program beyond its statutory deadline, especially when doing so costs taxpayers over $150 billion,” Li was quoted as saying in a joint press release issued by NCLA and the Mackinac Center for Public Policy.
Patrick J. Wright, vice president for legal affairs at the Mackinac Center, said that the Education Department’s actions represent “bad policy” that places an unlawful burden on taxpayers who do not have or have already paid off student loans.
“Perpetual deferment of federal student loans is bad policy because it shifts the burden from those who took out student loans to those who did not,” Wright said in a statement included in the release. “More importantly, it is illegal, as it strips congressional powers and unilaterally hands them to executive bureaucrats,” he added.
Mackinac Center said that it has legal standing to sue the Biden administration because it benefits from the Public Service Loan Forgiveness Program (PSLF) established by Congress in 2007. PSLF was created in part to help nonprofits like Mackinac attract employees through debt-relief incentives. The Education Department’s loan repayment pauses essentially remove that bargaining chip.
“Just as the PSLF program benefits the states suing over the unlawful half-trillion in student loan debt cancellation, so too the Mackinac Center benefits as an employer from PSLF,” Mark Chenoweth, President and General Counsel for NCLA, explained in a statement included in the press release. “When the Department of Education administratively undercuts Congress’s enacted program — either with permanent debt forgiveness or by extending deferments — PSLF employers have standing to sue to stop it,” he said.
Mackinac and NCLA assert in the complaint that the Department of Education “did not present relevant data nor provide a rational explanation for any of the eight extensions of the Payment-and-Interest Pause. As such, all eight extensions are arbitrary and capricious and must be set aside.”
Wright said that America has “a proud history of making sure that the executive branch acts within their constitutional authority, even during a national emergency.”