Student loan handout: New lawsuit says Biden didn't follow administrative procedures

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FIRST ON FOX – The conservative group Job Creators Network filed a lawsuit Monday challenging President Biden's student loan handout, which would eliminate $10,000 to $20,000 in debt for many borrowers at a taxpayer cost of $500 billion or more.

The suit, filed in the U.S. District Court for the Northern District of Texas, argues that the plaintiffs were denied due process under the Administrative Procedure Act (APA) to object to the move during a comment period.

"The Department of Education has flagrantly violated the APA’s notice-and-comment requirements," the complaint said. "Behind closed doors, the Department promulgated a new Debt Forgiveness Program that will affect tens of millions of Americans and cost hundreds of billions of dollars."

President Biden in August announced that his administration would forgive up to $10,000 or $20,000 in federal student loans for many borrowers. (AP Photo/Damian Dovarganes)

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Alleged failure to follow APA was often used by opponents of former President Donald Trump's administration to slow or block Trump's executive actions.

But the Biden administration says the president has broad emergency power to forgive student loans as he deems fit under a 2003 law called the HEROES Act.

That law was repeatedly invoked by both Biden and Trump to pause student loan payments in recent years, citing the COVID-19 pandemic. But many observers, including the left-leaning Brennan Center for Justice, say it's a dubious argument and potentially a "slippery slope" to use that power to forgive hundreds of billions in student loans.

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The difficulty for those challenging the law, however, has been the need to prove "standing" in federal courts – to prove they were hurt by the decision and thus have grounds to challenge it. Job Creators Network Foundation president Elaine Parker told Fox News Digital the alleged lack of APA process followed gives that to the plaintiffs in the suit.

"The plaintiffs were denied notice and comment, which the APA requires. That's pretty simple," Parker said. "Everyone in this country is affected by this program and so everyone should be allowed to provide their government with their views, and the plaintiffs here were denied that process."

The White House, meanwhile, said that those opposing student debt forgiveness are opposing a policy that helps many in the middle class. 

"While opponents of our plan are siding with special interests and trying every which way to keep millions of middle class Americans in debt, the President and his Administration are fighting to lawfully give middle-class families some breathing room as they recover from the pandemic and prepare to resume loan payments in January," White House spokesperson Abdullah Hasan told Fox News Digital. 

The suit was filed in the Fifth Circuit, where the appeals court is dominated by a 12-4 majority of GOP-appointed judges. That means if the case gets appealed, it could potentially stand a better chance of making it to the Supreme Court.

Other lawsuits against the student loan handout have been filed in the Seventh, Eighth and Ninth Circuits.

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One criterion the Supreme Court looks for when taking cases is split rulings among circuit courts of appeals. If the appeals courts rule differently on the suits, that could help bring the issue before the justices.

"This is the first case filed in the Fifth Circuit. We think it's a good place to be," Parker said. "The plaintiffs are located there, obviously, and we feel good about the merits of this case."