Education Department sued to block student loan forgiveness

The Pacific Legal Foundation, a nonprofit organization that fights government overreach, filed a lawsuit Tuesday against the Education Department in an attempt to block the agency's plans to cancel billions of dollars of student loan debt.

"Congress did not authorize the executive branch to unilaterally cancel student debt," said Caleb Kruckenberg, an attorney with the nonprofit group. "It's flagrantly illegal for the executive branch to create a $500 billion program by press release, and without statutory authority or even the basic notice and comment procedure for new regulations."

The Biden administration announced plans last month to cancel between $10,000 and $20,000 in student loans for borrowers who make less than $125,000 a year. The plan may cost more than $1 trillion, according to an estimate from the University of Pennsylvania.

Public interest attorney Frank Garrison, who works for the Pacific Legal Foundation, is the plaintiff in the lawsuit against the Education Department. He filed the lawsuit in Indiana and argued that he will be "worse off" because of the cancellation due to the "immediate tax liability" he will face because of the automatic cancellation of some of his debt.

Thirteen states treat forgiven debt as income and may tax the canceled student loans.