Addison-Based Advocacy Group Is Behind a Federal Lawsuit Challenging Student Loan Forgiveness

According to the U.S. Department of Education, some 8 million borrowers could be eligible for forgiveness under President Joe Biden's Student Debt Relief Plan.
According to the U.S. Department of Education, some 8 million borrowers could be eligible for forgiveness under President Joe Biden's Student Debt Relief Plan. Gage Skidmore
If everything stays on track, the U.S. Department of Education will be issuing applications for President Joe Biden’s Student Debt Relief Plan any day now. Designed to forgive up to $20,000 for certain student loan holders, the plan is facing several legal challenges across the country, the latest coming from the Dallas/Fort Worth area.

As first reported by The Associated Press, Job Creators Network Foundation, a small-business advocacy group based in Addison, filed a federal lawsuit against the Department of Education, claiming it didn’t follow procedures when approving the relief program. Specifically, the group argues in its legal filing that the Biden administration violated the Administrative Procedure Act (APA) by not taking public comment on the program before it was approved.

"The Department of Education has flagrantly violated the APA’s notice-and-comment requirements," the group's suit read. "Behind closed doors, the Department promulgated a new Debt Forgiveness Program that will affect tens of millions of Americans and cost more than 400 billion dollars."

The Congressional Budget Office estimates the program will cost $400 billion over the next 30 years.

To justify the program, the Biden administration used a law passed after the Sept. 11, 2001, terrorist attacks that gives “sweeping authority” to reduce or eliminate student debt during national emergencies. In a legal opinion from the U.S. Justice Department in August, the administration cited the pandemic as the national emergency.

But the suit argues that because there was no opportunity for people to comment on the program before its approval, it leaves some people out. The suit was filed on behalf of two people: one won’t see the full benefit of the plan and the other won't see any.

The plan provides up to $20,000 in debt relief to Pell Grant recipients and up to $10,000 to those who didn’t receive Pell Grants. To be eligible for relief, one's individual income must be less than $125,000 or $250,000 for households.

Myra Brown, one of the plaintiffs in the case, doesn’t qualify for any relief because the forgiveness program doesn’t cover commercially held loans that are not in default. The other plaintiff, Alexander Taylor, doesn’t qualify for the full amount of debt forgiveness because he didn’t receive a Pell Grant when he was in college, according to the suit.

"Behind closed doors, the Department promulgated a new Debt Forgiveness Program that will affect tens of millions of Americans and cost more than 400 billion dollars." – lawsuit

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Brown got her undergraduate degree from the University of Texas at El Paso in 1993 and attended graduate school at the Cox School of Business at Southern Methodist University. Graduating from SMU in 2002, she received student loans through the Federal Family Education Loan Program (FFEL) totaling more than $17,000. Initially, the Department of Education said these privately held loans were also eligible for relief if borrowers consolidated them into the Direct Loan Program.

On Sept. 29, though, the Department of Education changed its guidance on the loan relief, saying Federal Family Education Loan Program and Perkins loans were no longer eligible for forgiveness. Borrowers with these loans who requested they be consolidated into the Direct Loan program before Sept. 29 “are eligible for one-time debt relief.”

The new guidance excludes some 800,000 from relief, according to NPR. However, some of these loan holders, about 1.5 million, have borrowed from both the Federal Family Education Loan Program and the Direct Loan program, and will still qualify for some relief.

But the department said it was still looking for ways to offer relief for borrowers like Brown. “[The Education Department] is assessing whether there are alternative pathways to provide relief to borrowers with federal student loans not held by [the department], including FFEL Program loans and Perkins Loans, and is discussing this with private lenders,” the new guidance said.

Taylor got his undergraduate degree from the University of Dallas using loans from the Direct Loan Program. He now has four loans totaling more than $35,000. He didn’t have a Pell Grant, so he’s eligible for only up to $10,000 in relief.

“Ms. Brown believes it is irrational, arbitrary, and unfair to exclude her from the program because her federal student loans are commercially held and not in default,” the suit says. “Mr. Taylor believes that it is irrational, arbitrary, and unfair to calculate the amount of debt forgiveness he receives based on the financial circumstances of his parents many years ago.”

The suit says they both want a chance to comment on “any proposal from the department to forgive student loan debts.” Because they weren’t given this opportunity, the suit argues the Department of Education shouldn’t be allowed to roll out the program.

In a statement to The Associated Press on Monday, White House Spokesperson Abdullah Hasan defended the program. Hasan said in the statement, “While opponents of our plan are siding with special interests and trying every which way to keep millions of middle-class Americans in debt, the President and his Administration are fighting to lawfully give middle-class families some breathing room as they recover from the pandemic and prepare to resume loan payments in January.”

In an emailed statement to the Observer, Elain Parker, president of Job Creators Network Foundation, said even if the Biden administration rolled out programs that would offer relief to people like Brown and Taylor (in Taylor's case, more relief), the group would still have a problem with the program because of the lack of public input.

The group "believes in the rule of law, and requires government agencies to follow notice-and-comment procedures outlined in the Administrative Procedure Act [APA] when implementing new programs, like the Debt Forgiveness program we are challenging,” Parker said.

"The APA ensures that Americans have a chance to provide information about how certain government programs will impact them and provide their opinions. The government ignored the law and did not follow proper procedures when pushing out this new program that some estimate will cost over $400 billion," she added.
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Jacob Vaughn, a former Brookhaven College journalism student, has written for the Observer since 2018, first as clubs editor. More recently, he's been in the news section as a staff writer covering City Hall, the Dallas Police Department and whatever else editors throw his way.
Contact: Jacob Vaughn

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