Supreme Court Justice Amy Coney Barrett once again denied an emergency application Friday to block President Biden’s multi-billion dollar student loan bailout.
Two Indiana men, Frank Garrison and Noel Johnson, had asked Barrett to stay the program from going into effect while they appeal the dismissal of their initial suit by an Indiana federal judge.
Johnson and Garrison, an attorney at the libertarian Pacific Legal Foundation, had argued that the automatic forgiveness of their student loan debt would cause them irreparable harm by sticking them with a hefty state tax bill.
“In its rush, the administration created new problems for members of the class—borrowers in at least six states that tax loan cancellation as income and who are pursuing debt forgiveness under statutory forgiveness programs like [Public Service Loan Forgiveness],” attorneys Caleb Kruckenberg and Michael Poon wrote in their request for an emergency stay, filed Tuesday.
“These borrowers … will actually be worse off because of the cancellation,” they added.
The lawsuit was rejected by the Indiana judge on the grounds that Johnson and Garrison could not prove their tax burden was “traceable” to Biden’s loan cancellation program, which has caused an outcry from Republicans and conservatives who say it is both illegal and would worsen decades-high inflation.
However, court challenges to the plan have been slow in coming due to difficulty finding plaintiffs who have standing — that is, an argument that shows they are directly harmed by the action.
On Oct. 20, Barrett rejected a request from the Brown County (Wis.) Taxpayers Association to block the program on the ground that it would cost taxpayers billions of dollars.
In both cases, Barrett neither commented on the filing, asked the Justice Department to respond, nor referred the matter to her other colleagues.
Barrett handles emergency requests arising from the Seventh Circuit Court of Appeals, which covers both Indiana and Wisconsin, as well as Illinois.
The day after Barret denied the Wisconsin taxpayers request, the Eighth Circuit Court of Appeals issued an administrative stay while it considers a motion from six Republican-led states to block the program.
Under Biden’s plan, borrowers are eligible for forgiveness of up to $10,000 in federally owned student debt if they have an annual income under $125,000. Pell Grant recipients are eligible for another $10,000 in forgiveness.
About 8 million people were expected to receive the benefits automatically; however, the White House announced soon after Garrison’s initial Sept. 27 lawsuit that borrowers could opt out of the automatic cancellation.
“Since this program was first announced, the administration has done everything in its power to avoid judicial scrutiny,” Kruckenberg told The Post in an email. “Thus far it has succeeded. That doesn’t change the fact that it is completely unlawful. We are disappointed by the denial of an emergency injunction, but will continue to fight this program in court.”
Biden invoked emergency powers to authorize the loan forgiveness following a pressure campaign from the Democratic Party’s left wing — who argued the COVID-19 pandemic meant he had a right to waive the debt.
However, the president appeared to undercut his own justification for the handout when he said in a “60 Minutes” interview Sept. 19 that “the pandemic is over” — before any loans actually were forgiven.
In a memo justifying the loan forgiveness plan, the Education Department’s legal department cited a 2003 law that allows the president to “alleviate hardship” for student loan recipients during a national emergency.
The non-partisan Congressional Budget Office estimated that Biden’s plan would cost taxpayers $400 billion, with the additional deferment of payments and interest accrual on student loans through the end of 2022 costing taxpayers another $20 billion.
The Committee for a Responsible Federal Budget said the CBO actually underestimated costs because it didn’t account for another part of Biden’s plan that caps repayment on undergraduate loans at 5% of a person’s earnings, down from the current 10%. The group projected in August that the so-called “income-driven repayment” (IDR) policy would cost taxpayers another $120 billion.
The University of Pennsylvania’s Penn Wharton Budget Model estimated in August that Biden’s debt cancellation alone would cost $519 billion, while the postponement of payments would cost another $16 billion and the lower repayment rule would cost $70 billion.
Additional reporting by Steven Nelson