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Washington, D.C. – The Cato Institute filed suit in federal court in Kansas today, challenging the legality of the Biden Administration’s program of mass cancellation of student loan debt.
“Forcing taxpayers to pick up the tab for other people’s college loans is bad policy,” said Cato President and CEO Peter Goettler, “but in the case of President Biden’s order, it is also illegal, because neither President Biden nor the Department of Education has the power to cancel student loans without congressional authorization.”
Cato is represented by the New Civil Liberties Alliance, an organization dedicated to protecting civil liberties from unlawful administrative power.
A key issue in this case, as in other challenges to President Biden’s debt-cancellation scheme, is the question of standing to sue. Cato’s standing is based on the congressionally enacted Public Service Loan Forgiveness program, which was designed to help 501(c)(3) organizations like Cato, the ACLU, the American Red Cross, and others attract employees by providing debt relief to those who choose to work for non-profits.
By providing across-the-board loan-forgiveness, the Biden scheme completely—and unlawfully—undermines Congress’s goal in enacting the Public Service Loan Forgiveness program.
“The Constitution does not give the federal government the power to fund, guarantee, or cancel student loans. But if it’s going to wield illegitimate power, it should at least do so without additional, maybe even more fundamental, violence to the rule of law,” said Goettler. “Allowing the executive branch to undermine the explicit policy choices of the legislative branch, as President Biden’s debt-cancellation scheme plainly does, is completely beyond the pale.”
Several current and former Cato employees have participated in the Public Service Loan Forgiveness program.
The HEROES Act, which the Administration claims provides the authority for the mass program, was passed in 2003 in an effort to help deployed members of the military by forgiving some of their student loan debt.
“The Administration’s claim that its plan is legal under the HEROES Act is totally implausible and represents yet another illegitimate attempt by executive-branch officials to usurp Congress’s sole constitutional prerogative to make policy,” said Clark Neily, Senior Vice President for Legal Studies at Cato.
Sheng Li, Russ Ryan, and Mark Chenoweth will be the NCLA attorneys on the case.
“Ideally, federal student loans would be phased out altogether,” said Neal McCluskey, director of Cato’s Center for Educational Freedom. “They fuel rampant college price inflation, are a major burden on taxpayers, and do not have constitutional warrant to exist. Cancelling them by executive fiat compounds all of these huge problems.”