What You Need To Know About This Lawsuit Against Biden’s $1 Trillion Student Loan Giveaway

Oct 4, 2022 | Political News

Mere weeks after President Biden announced his intent to provide taxpayer giveaways of up to $20,000 on federal student loans, the Pacific Legal Foundation filed the first of what could be many lawsuits over the policy.

Herein is a primer on the legal theories behind the lawsuit, outlined in greater detail in the complaint itself. Despite Biden administration backtracking and alleged changes to the program, the lawsuit is still moving forward—and so likely will others.

Financial Harm Gives Plaintiff Standing

The case’s plaintiff, Frank Garrison, actually works for the Pacific Legal Foundation, which plays a role in his complaint. As an employee for a 501(c)3 nonprofit, Garrison participates in the Public Service Loan Forgiveness program. Under that program, if he continues to work in the nonprofit sector, taxpayers will pay off his entire loan balance in approximately four years.

Under Indiana law, Garrison will owe no state income taxes on the balance of his loan when it gets forgiven in four years’ time. But Indiana is one of at least six states where individuals receiving benefits under the Biden program will face a state income tax bill. (Democrats passed a provision exempting “forgiveness” under a potential Biden student loan amnesty from federal income taxes in last year’s “Covid relief” spending spree.)

Garrison thus faces a no-win situation: Making taxpayers pay off $20,000 of his loan balance now won’t make a difference to him later. He will have his entire balance put on taxpayers’ balance sheets in a few years’ time, no matter its size.

But right now, it will stick him with a state income tax bill of roughly $1,000—a bill he wouldn’t have had to pay if taxpayers paid that $20,000 later due to his participation in the public service payoff, rather than the new Biden bailout.

Because courts only adjudicate particular disputes, taxpayers who will pay the bill for Biden’s amnesty lack standing to object to the administration’s actions in court. But Garrison can claim a specific financial injury due to the Biden amnesty, meaning he can more credibly claim standing to file suit.