Arizona Attorney General Mark Brnovich filed another lawsuit against the Biden administration on Thursday, challenging the president’s authority to cancel student loan debt. He argued that it goes contrary to several recent Supreme Court decisions striking down federal agencies’ assertion of power never granted to them by Congress. The Biden administration intends to cancel $10,000 to $20,000 of student loan debt for people who make less than $125,000 or $250,000 annually for a married person filing jointly.
In his lawsuit, Brnovich said, “This loan cancellation … is a naked handout by one administration and one party to favored political classes (college graduates and those employed by the higher education industry) at the expense of taxpayers everywhere.”
Brnovich labeled the move “the most expensive unilateral executive action ever attempted by any President,” which “further inflicts greater harm on the fiscal solvency of the United States than any other Presidential action ever.” This is because “its cost exceeds the entire amount that Congress has appropriated for the Department of Education for the last five years.”
The brief noted how even Speaker of the House Nancy Pelosi (D-CA-12) said last year that President Joe Biden does not have that authority, only Congress. The Department of Education issued an opinion to then-Secretary of Education Betsy DeVos in January 2021 reiterating this position. Even Biden himself questioned in February 2021 whether he had the authority to cancel student loan debt unless it was a small amount like $10,000, and White House officials clarified later that even the $10,000 reference meant congressional approval.
Biden justified the debt cancellation by invoking the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act). The lawsuit states that the HEROES Act, which was enacted in the wake of the September 11, 2001, terrorist attacks, “was meant to relieve active-duty personnel from bureaucratic constraints by waiving various administrative requirements, such as documentation requirements, and to provide grace periods to accommodate service in active operations.” Its purpose was “to provide the Secretary of Education with specific waiver authority to respond to war or other military operation or national emergency.”
When COVID-19 became a national epidemic in March 2020, DeVos “used that authority to set all federal student loan interest rates to zero and automatically enter borrowers into administrative forbearance, allowing them to defer payments without financial penalty.”
However, the lawsuit points out that the pandemic has ended. Biden now repeatedly asserts that “the pandemic is over,” yet he contends, as Brnovich points out in the complaint, that “the pandemic is still a useful pretext to adopt policies that would otherwise be incontestably illegal.”
The brief noted that efforts to cancel student loan debt in Congress have failed, evidence the debt cancellation plan is not related to COVID-19. The Office of Legal Counsel at the U.S. Department of Justice issued a memo that stated that the HEROES Act could be used for debt forgiveness if there was a correlation to COVID-19, but, the complaint notes, “The Biden Administration has not made this determination.”
The brief lists five ways the debt cancellation hurts Arizona, demonstrating why the Arizona Attorney General’s Office (AGO) has the standing to sue. First, it hurts employers like the AGO, who benefit from various student debt forgiveness programs. It diminishes the AGO’s “ability to recruit legal talent” through the Public Service Loan Forgiveness Program (PSLF).
Second, the brief states the loan cancellation hurts Arizona’s state revenues since it will take effect for 2022 and 2023, when it is not taxable due to the American Rescue Plan Act of 2021 (ARPA).
Third, the brief cites Jason Furman, who served as former President Barack Obama’s chair of the Council of Economic Advisors, warning about how it would harm the economy. “Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” he tweeted. “Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.”
Lawrence Summers, one of Obama’s directors of the National Economic Council and one of former President Bill Clinton’s treasury secretaries, echoed the concern in August that it would increase inflation.
The brief argues that a fourth way the debt cancellation will hurt Arizona is by increasing the state’s cost of borrowing. Since the federal government will need to borrow more money, this competes with Arizona’s ability to obtain good loan rates.
Finally, the lawsuit said the move hikes law enforcement costs since it will “increase the amount of consumer (and felony) fraud relating to student debt.” The lawsuit cited an email the Department of Education recently sent borrowers, warning them to “beware of scams” related to the new program. “States — not the federal government — are the primary enforcers of consumer protection laws, including prohibitions on deceptive and unfair practices,” the brief explained.
The brief cited a study by the Wharton School of the University of Pennsylvania, which found that “the overall cost could rise to more than $1 trillion when factoring in the other components of the department’s announced plans.”
Finally, Brnovich accused the Biden administration of using sneaky maneuvers to thwart lawsuits. “The administration keeps changing its program primarily for the purpose of evading judicial review, rather than any legitimate purpose.” The lawsuit explains how after several lawsuits were filed, the Biden administration tweaked its policies slightly to discredit the plaintiffs’ grounds. They even went so far as to declare that one plaintiff had chosen to “opt out” by filing the lawsuit, stating that he was no longer eligible to receive the $10,000 cancellation.
As attorney general, Brnovich has frequently sued schools over educational issues. He sued his alma mater, Arizona State University (ASU), multiple times. One lawsuit successfully stopped the university and community colleges from providing in-state tuition to illegal immigrants. Another lawsuit in 2017 challenged ASU and other public universities’ steep increases in tuition. In September 2021, he challenged a deal ASU made with hotel developers to let them use school property, allowing them to avoid property taxes. Most recently, Brnovich filed a lawsuit against Scottsdale Unified School District in June for violating the state’s open meeting law to prohibit public comment on a proposed mask mandate and other topics.
Read the lawsuit:
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