Mackinac Center asks 6th Circuit to reverse loan forgiveness ruling

A federal appeals court could consider student loan forgiveness and the constitutional separation of powers if two nonprofit organizations get their way. A brief filed Aug. 27 by the New Civil Liberties Alliance asks the 6th U.S. Circuit Court of Appeals to overrule a district court that dismissed a lawsuit brought by the Mackinac Center for Public Policy.

In August 2023 the Mackinac Center filed suit in federal district court, arguing that the Biden administration acted without congressional approval when it stopped collecting payments and calculating interest on student loans. Congress authorized six months of interest forgiveness and suspended payments during the COVID-19 pandemic. The Biden-era education department repeatedly extended those measures.

A federal district court rejected the Mackinac Center’s claims, saying it did not have standing to sue.

Patrick Wright, the Mackinac Center’s vice president of legal affairs, is not deterred. “We’re still trying to make it clear that Congress appropriates money, and if the United States is going to give away hundreds of billions of dollars it has to do so through legislation and not executive fiat,” Wright told Michigan Capitol Confidential in a phone interview.

The Mackinac Center asserts that it had the right to sue because it suffered harm from the administration’s actions, which diminished the value of the Public Service Loan Forgiveness Program. Congress estalished the program in 2007 to offer individuals an incentive to work for nonprofits by offering them debt relief, contingent on ten years of employment.

“The United States Department of Education unlawfully interfered with a federal program that has been helping public interest employers like the Mackinac Center for Public Policy recruit and retain college-educated employees in a very competitive labor market,” Daniel Kelly, senior litigation counsel at the civil liberties group, told CapCon in an email.

The district court, Kelly said, refused to recognize the damage the department caused with its actions.

“Mackinac is asking the 6th Circuit Court of Appeals to remedy that error so that it may proceed with its efforts to restore the full effectiveness of the Public Service Loan Forgiveness program,” he added.

The education department did not respond to an email seeking comment.