GOP Officials Seek Ways To Stop Joe Biden's Student Loan Cancellation Plan as Some People May Face Heavy Tax for Getting Relief

Right-wing legal organizations and Republican attorneys general are considering filing lawsuits to stop President Joe Biden's ground-breaking plan to cancel millions of borrowers' student loan debt.

More than 20 million Americans whose outstanding balances are scheduled to be wiped out would be dragged back into debt if GOP challenges are successful.

Republicans Urge To Sue Biden For "Abusing Power"

Despite a federal exemption, borrowers in some Republican-dominated state legislatures may still be hit with significant tax payments for their canceled loans if state lawmakers do not act fast to reform how student loan relief is taxed. According to the White House, roughly 43 million federal student loan debtors are qualified for relief under the president's plan, which was unveiled last month. Of them, 20 million are qualified to have all of their obligations forgiven.

Borrowers who took out federal student loans to pay for their educational expenses and make less than $125,000 per year - or $250,000 if filing jointly - are eligible for up to $10,000 in debt cancellation. Pell grant recipients who fall under the same income cutoff will be qualified to have up to $20,000 of their federal student loan debt forgiven.

The Job Creators Network, a powerful conservative special interest group, stated it is weighing its legal options to stop the president's illegal student loan bailout as soon as the administration's proposal was announced. However, it is unclear that any potential plaintiff could bring a claim that would not be summarily rejected for lack of standing in the manner.

According to a frequently referenced article from the Virginia Law Review, no one would have any precedent or legal basis to dispute the administration, including taxpayers, former borrowers, Congress, state governments, and loan servicers. Republican state attorneys general have persisted in their efforts. Texas Attorney General Ken Paxton, who is also involved in many cases against the Biden administration, claims that the plan is unlawful.

"We have to find a method in the state of Texas to find standing, or we need individuals to sue that have damages as a result of this," Paxton continued, implying that GOP leaders are looking for plaintiffs who are prepared to file a lawsuit to launch a legal battle. To combat what he called the administration's abuse of power and assault on working-class Americans, Missouri Attorney General Eric Schmitt said to Fox News that we're actively looking into legal possibilities.

According to Mark Brnovich, the attorney general of Arizona, "We are working with some colleagues attempting to find the best legal basis of moving to sue the Biden administration on the student loan forgiveness scheme." Republican challengers are looking for a potential client with standing and the gumption to file a lawsuit, according to John Malcolm, director of the Meese Center at the right-wing Heritage Foundation, who spoke to The Washington Post.

By a 2003 legislation giving the president the power to forgive student loan debts in connection with national emergencies, the Biden administration has relied on advice from the US Department of Justice detailing comprehensive debt relief from the executive branch as "reasonable."

Some States Could Tax Student Loan Debt Relief

While slamming GOP opponents of the plan for receiving tens of thousands of dollars in federal assistance themselves, the White House has frequently emphasized the plan's legal footing, the outcome of months of internal debate and legal analysis.

These government-backed congressionally sanctioned loans are also tax-exempt for the recipients. However, Washington DC think tank The Tax Foundation canceled student loan balances might be treated as taxable income in Arkansas, Minnesota, Mississippi, North Carolina, and Wisconsin, as per Independent.

The White House's federal student loan forgiveness plan is still under scrutiny, and numerous evaluations indicate that the government may have overestimated the cost of the measure. The Biden administration estimates that over the following ten years, this will result in a $240 billion loss of revenue. However, several private evaluations already indicate that the White House's projection is at best moderate, especially in the absence of cost projections for the other policy items.

The Penn-Wharton budget model, which forecasts that overall expenses could approach $1 trillion, is one of the most frequently quoted. According to Penn-Wharton, the cost of student debt cancellation alone may be between $469 billion and $519 billion, or about twice as much as the White House estimates.

Bharat Ramamurti, deputy director of the White House National Economic Council, 75% of qualified borrowers who ask for debt cancellation are included in the $240 billion estimate. The president of the Taxpayers Protection Alliance condemned the idea as a "bailout" for wealthy college grads despite his assurance that the Department of Education and Office of Management and Budget would provide a complete cost sheet "in the coming weeks, Daily Mail reported.