A group in Wisconsin claims President Biden’s plan to cancel up to $20,000 in student loan debt violates federal law by intentionally seeking to narrow the racial wealth gap and help Black borrowers.
It stands out, however, by also bringing race into the mix.
In promoting the debt forgiveness plan, the White House has said it could help narrow the racial wealth gap and advance racial equity. But the lawsuit argues that those statements constitute an “improper racial motive” and violate the constitution’s guarantee of equal protection of the laws.
“The White House has indicated that one reason to do this is that they believe it would disproportionately benefit certain racial groups,” said Rick Esenberg, president and general counsel of the Wisconsin Institute for Law and Liberty. “The racial motivation supports these taxpayers standing to challenge [the policy] and informs yet another constitutional difficulty with the program.”
The president’s policy would cancel up to $10,000 in federal student loan debt for borrowers who earn less than $125,000 per year, or less than $250,000 for married couples. Those who received Pell Grants, federal aid for lower-income students, could see up to $20,000 forgiven.
There are no racial criteria for loan forgiveness. But because of the disparities in who holds student loans, the cancellation policy could have an outsize effect on Black borrowers, who shoulder a disproportionate share of the debt and frequently receive Pell Grants because of a lack of financial resources to attend college.
“Student loan policies have had a discriminatory impact and student debt cancellation helps to remedy some of that discriminatory impact, but this is a race-neutral policy,” said Abby Shafroth, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project.
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End of carousel- The Biden administration will extend a pause on student loan payments as legal fights have put the debt relief plan in limbo.
- Confused about the status of student loan forgiveness? Here’s what we know.
- Want to calculate your eligibility? See how much of your loan debt can be forgiven.
- In October, a federal appeals court blocked the imminent cancellation of federal student loans.
- President Biden’s plan will cancel some of the federal student debt held by millions of Americans.
- Borrowers can qualify for up to $10,000 in student loan forgiveness, and recipients of Pell Grants are eligible for an additional $10,000 in forgiveness.
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Genevieve Bonadies Torres of the Lawyers’ Committee for Civil Rights Under Law said the lawsuit “turns the equal protection clause on its head,” as the mere awareness of race or a disproportionate impact does not amount to a violation of the law. She said conservative groups have unsuccessfully used similar arguments to challenge high school admissions policies that expand access for marginalized students.
“I can think of a host of policies and practices that disproportionately help White people that, again, are not being put under the legal microscope,” Bonadies Torres said. The lawsuit “is indicative of the attacks that we’re seeing on any opportunities that try to get people relief that they’re due.”
Targeting relief to borrowers with the greatest economic need, the White House has said, could address the racial wealth disparity. The administration has also noted the benefits to borrowers of all ages and those from low- and middle-income households. It has framed the plan as a way to give Americans a stronger financial footing coming out of the pandemic.
White House press secretary Karine Jean-Pierre said Tuesday that the president is making good on a campaign commitment to help more than 40 million Americans mired in student debt and people affected by the economic upheaval caused by the global health crisis.
“It’s a shame that you have Republican groups, Republican states that are trying to stop Americans from getting a little bit of breathing room, a little bit of a break,” Jean-Pierre said during a press briefing. “It is shameful that they are siding with the special interests. It is shameful they are not siding with the American people. This is one of the ways the president is going to continue to work for the American people.”
The Biden administration has been adamant that it has the legal authority to cancel student debt, citing a 2003 law giving the executive branch broad authority to overhaul student loan programs. It is facing several legal challenges, including one from a coalition of six Republican-led states, that could delay or halt the implementation of the policy.
The Wisconsin Institute for Law and Liberty and other conservative advocacy groups argue that Biden’s policy represents illegal executive overreach because the 2003 law was created to give the president authority after a disaster like the Sept. 11, 2001, terrorist attacks. The group also asserts that the executive branch lacks the authority to create a new forgiveness policy and is usurping Congress’s power to make law.
“The issue isn’t as simple as whether you like student loan forgiveness or you don’t like student loan forgiveness. It’s also whether you really want to create a precedent where a president of the United States will have this kind of authority,” Esenberg said. “Process and the rule of law matters.”