Republican States Sue to Block Biden’s Student Debt Relief Plan Over Executive Overreach

Republican-led states have launched a new legal battle against President Biden’s student loan forgiveness plans, claiming executive overreach and potential economic harm.

At a Glance

Seven Republican-led states have sued to block Biden’s latest student debt relief plan
The lawsuit argues the plan exceeds executive authority and threatens state economies
This is the third attempt by the Biden administration to cancel student loans
Nearly 8 million Americans have enrolled in the SAVE Plan, including 4.5 million with $0 monthly payments
The legal battle could affect millions of borrowers waiting for loan forgiveness

Republicans Challenge Biden’s Student Debt Relief

In a move that intensifies the ongoing debate over student loan forgiveness, seven Republican-led states have filed a lawsuit against President Joe Biden and Education Secretary Miguel Cardona. The legal action, spearheaded by Missouri Attorney General Andrew Bailey and joined by Georgia, Alabama, Arkansas, Florida, North Dakota, and Ohio, aims to block the administration’s latest attempt at student debt relief.

The lawsuit, filed in a federal court in Brunswick, Georgia, argues that the Biden administration has “unlawfully tried to mass cancel hundreds of billions of dollars in loans.” This legal challenge targets a newly proposed regulation intended to help borrowers excluded from current loan forgiveness initiatives or burdened by unsustainable debt.

Republican-led US states sue over new Biden student debt relief plan https://t.co/8vG9ps8GzJ pic.twitter.com/KogMhgW6Oo

— Reuters (@Reuters) September 3, 2024

Third Time’s Not the Charm

This latest legal action marks the third attempt by the Biden administration to implement widespread student loan forgiveness. Previous efforts have been blocked by courts, including a $430 billion program halted by the U.S. Supreme Court in June 2023. Following that setback, the administration introduced the SAVE (Saving on a Valuable Education) Plan to reduce monthly payments and accelerate loan forgiveness.

“This is the third time the Secretary has unlawfully tried to mass cancel hundreds of billions of dollars in loans,” said the filing, which was made in a federal court in Brunswick, Georgia. “Courts stopped him the first two times, when he tried to do so openly. So now he is trying to do so through cloak and dagger.”

The SAVE Plan, launched last year, is a modified version of existing repayment plans with more generous terms. It reduces monthly payments and forgives loans in as little as 10 years. Almost 8 million Americans have enrolled in the SAVE Plan, including 4.5 million low-income borrowers with $0 monthly payments.

Republican-led US states sue over new Biden student debt relief plan https://t.co/OIzvkcqt37

— Rappler (@rapplerdotcom) September 4, 2024

Legal and Economic Concerns

The Republican attorneys general argue that the Department of Education has directed federal loan servicers to start canceling loans before the rule’s official finalization. They claim this action not only exceeds executive authority but also threatens state economies.

“Yet again, the President is unilaterally trying to impose an extraordinarily expensive and controversial policy that he could not get through Congress,” according to the new suit.

One key concern raised in the lawsuit is the potential impact on the Missouri Higher Education Loan Authority (MOHELA). The suit argues that the SAVE Plan would deprive MOHELA of up to 15 years in servicing fees, potentially affecting the state’s economy. Additionally, the plaintiffs claim that the plan undermines the Public Service Loan Forgiveness program, which could hinder states’ ability to hire and retain employees.

Implications for Borrowers

While the legal battle unfolds, millions of borrowers are left in limbo. The Education Department has stated that SAVE enrollees would be placed in an interest-free forbearance while litigation continues. However, the uncertainty surrounding the program’s future could have significant implications for those counting on loan forgiveness.

Biden’s latest proposal aims to reduce or cancel student loans for 30 million Americans. One provision would cancel accumulated interest for federal student loan balances larger than the original amount borrowed. Full interest cancellation would apply to borrowers with annual incomes of $120,000 or less, while others could receive up to $20,000 in debt relief.

As this legal challenge proceeds, it will undoubtedly fuel the ongoing debate over the limits of executive power, the role of Congress in major policy decisions, and the broader implications of student debt relief on the American economy.