Lawsuit could block student debt cancellation plan

A conservative legal group has filed a lawsuit to stop President Joe Biden’s plan to cancel billions of dollars of student debt, according to the New York Times.

The federal plan would cancel $10,000 of student debt for borrowers who earn less than $125,000 a year and another $10,000 for borrowers who were eligible for a Pell Grant.

The Congressional Budget Office has said the plan may cost $400 billion.

A Pacific Legal Foundation complaint, filed in U.S. District Court for the Southern District of Indiana, calls the plan an end-around the Congress with untold economic impacts.

In order to challenge the plan, opponents must have a plaintiff who can claim they would be harmed by it. This case hinges on a plaintiff who claims he may have to pay $1,000 in additional taxes if his loan is forgiven through the federal program. He is seeking forgiveness for his college debt through another program that would eliminate his debt without taxing it, according to the New York Times.

The Biden program prevents federal taxes from being levied against student debt relief, but states may choose to tax it.