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Billionaire-backed legal group sues to block student loan forgiveness
In August, President Biden announced he would provide student debt relief to lower and middle-class borrowers. Under the plan, eligible individuals would get up to $20,000 in student debt canceled if they received Pell Grants and up to $10,000 otherwise. The program is open to individuals who make less than $125,000 annually ($250,000 for married couples). The plan will benefit up to 43 million borrowers, and up to 20 million people will see their loans zeroed out.
On Tuesday, a man named Frank Garrison filed a federal lawsuit seeking to block the relief. Here is how the Washington Post reported the news:
A public interest lawyer in Indiana is suing to block President Biden’s plan to cancel some student debt, arguing that the policy will force him to pay state taxes on the forgiven amount.
And this is the lead of CNN's story:
In one of the first significant legal challenges to President Joe Biden’s student loan forgiveness plan, a public interest lawyer filed a lawsuit Tuesday arguing that the policy is an abuse of executive power.
In both stories, we later learn that Garrison is being represented in the case by his employer, Pacific Legal Foundation (PLF), which the Washington Post describes as a "conservative public interest law firm." But what you will not learn from either story is that the Pacific Legal Foundation receives extensive funding from right-wing billionaires. And this "public interest law firm" has a record of filing lawsuits that advance its donors' economic and ideological interests.
Among the PLF''s major donors are entities controlled by right-wing billionaire Charles Koch, CEO of Koch Industries. A Popular Information review of tax filings from 2019 and 2020, the latest available, found that the Charles Koch Foundation and the Charles Koch Institute donated $2,331,550 to PLF in those two years.
In 2021, PLF filed suit "to strike down the Centers for Disease Control and Prevention (CDC) eviction moratorium, which [was] designed to protect millions of Americans from being thrown out of their homes during the pandemic." From the outset of the pandemic, Koch Industries began "plowing money into real estate." The Wall Street Journal reported in March 2021 that Koch "is emerging as a major real-estate investor during the pandemic, using its robust cash reserves to buy properties at beaten-down prices." The Guardian noted that Koch Industries, "real estate spending spree has coincided with Koch-funded conservative groups mounting lawsuits against the federal eviction ban."
In this case, PLF's suit to block student loan forgiveness aligns with Koch's economic and political interests. Economically, the less money that the government collects from people making under $125,000, the more it may ultimately require from billionaires (like Charles Koch) and profitable corporations (like Koch Industries). Politically, people who attend college tend to be more liberal than the general population. Providing meaningful student loan relief could increase their participation in future elections, potentially damaging the Republican candidates that Koch favors and spends millions to support.
PLF also receives significant support from other foundations that share Koch's right-wing ideology. In 2019 and 2020, PLF received $525,000 from the Sarah Scaife Foundation and $150,000 from the Harry Bradley Foundation. PLF also reportedly receives major funding from Richard Uihlein, the right-wing billionaire that owns the office supply company Uline.
Pacific Legal Foundation's creative legal theory
One of the biggest challenges in filing a lawsuit to block Biden's debt relief program is fulfilling the technical legal requirement of standing. To file a civil suit in the United States, you can't just point out that someone is doing something that you think is wrong. You have to show that you are suffering immediate and concrete harm.
But who really suffers from student loan forgiveness?
According to the lawsuit, it's Garrison. The lawsuit says that Garrison "financed his college education using federal student loans" and was a Pell Grant recipient. Garrison says he is currently enrolled in another program called Public Service Loan Forgiveness (PSLF). Under that program, people working in a public interest capacity can have their loans forgiven after making 120 payments.
Garrison also says he lives in Indiana, which does not tax loans forgiven under the PSLF but does tax loans forgiven in other ways, including under Biden's new program. So Garrison says that the program will require him to pay "a state income tax liability of more than $1,000 for 2022" even though "a $20,000 reduction in his total indebtedness will not change either his monthly payment obligation or the total amount of the loans he must repay." This, the lawsuit states, gives Garrison standing.
There are a couple of issues, however, with Garrison's argument. First, the details of the program have yet to be established by the Biden administration. The administration could simply design the program so that anyone can opt-out. The White House indicated that would be the case in its response to the lawsuit. "The claim is baseless for a simple reason: No one will be forced to get debt relief. Anyone who does not want debt relief can choose to opt out," Abdullah Hassan, White House assistant press secretary, said in a statement.
The other issue involves Garrison's state of residence. According to the lawsuit, Garrison lives in Indiana. This is important because Indiana is one of the few states that would tax student loan forgiveness provided by Biden's program. But, until Tuesday morning, PLF's website said that Garrison was based in Washington, DC. Up until very recently, Garrison's LinkedIn page said the same thing:
This is significant because DC would not tax student loan forgiveness under Biden's program, and Garrison's case would be moot.
PLF's lawsuit is also fundamentally contradictory. The lawsuit argues that Garrison has standing because he would pay $1,000 more than he would otherwise. But the "solution" they offer to this problem is for millions of people to pay tens of thousands of dollars more.
It suggests that PLF may be more concerned about the economic and ideological interests of billionaires like Charles Koch than the large segment of the public saddled with student debt.