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Biden Student Loan Plan Faces Lawsuit from Ex-Senate Hopeful (1)

Sept. 13, 2022, 7:53 PMUpdated: Sept. 13, 2022, 8:21 PM

An Oregon homeowner who once ran for the U.S. Senate as a Republican is challenging President Joe Biden‘s student loan plan in federal court, arguing that the relief will worsen inflation and raise the interest expense on his mortgage.

The complaint, filed Monday by Daniel Laschober in the US District Court for the District of Oregon, argues that Biden improperly relied on a 2003 law (Public Law 108-76) as the basis to reduce or eliminate the obligation to repay federal student loan debt in response to the Covid-19 pandemic. The plaintiff also argues that Biden needs clear approval from Congress to eliminate broad swaths of student loan debt, an authorization he contends Biden doesn’t have.

Biden’s student loan relief plan, announced Aug. 24, would forgive up to $20,000 in federal loans for those who also received Pell Grants and a maximum of $10,000 for other borrowers. Only those earning less than $125,000, or $250,000 for married couples, would qualify for the relief.

The lawsuit could test the limits of presidential authority over federally-backed student loans. The US has 43.4 million borrowers with federal student-loan debt, according to the Education Data Initiative.

Laschober lost in the Republican primary for the U.S. Senate in 2016 and also unsuccessfully ran for a seat in the Oregon House in 2018 and 2020. He is representing himself in the suit.

The 2003 law allows the Department of Education to waive federal student loan requirements to support borrowers in an emergency, such as a natural disaster or war. Congress passed the law to help borrowers serving in the military after the Sept. 11 attacks. Biden said in August that the Covid-19 pandemic is such an emergency, even as deaths have fallen.

Both the Trump and Biden administrations used the law, called the Higher Education Relief Opportunities for Students Act, to justify pausing student loan payments during the pandemic. Trump’s Education Department said that the law couldn’t act as authority for “mass cancellation, compromise, discharge, or forgiveness” of student loans—a view that Biden rescinded in August.

The case is Laschober v. Cardona, D. Or., No. 3:22-cv-1373, 9/12/22.

(Adds details about plaintiff's argument and Biden's student debt relief plan.)

To contact the reporter on this story: Courtney Rozen in Washington at crozen@bgov.com

To contact the editor responsible for this story: Bernie Kohn at bkohn@bloomberglaw.com