Six Republican-led states are suing the Biden administration in an effort to halt its plan to forgive student loan debt for tens of millions of Americans, accusing it of overstepping its executive powers.
It’s at least the second legal challenge this week to the sweeping proposal laid out by President Joe Biden in late August, when he said his administration would cancel up to $20,000 in education debt for huge numbers of borrowers.
The announcement, after months of internal deliberations and pressure from liberal activists, became immediate political fodder before the November midterms while fuelling arguments from conservatives about legality.
In the lawsuit, being filed on Thursday in a federal court in Missouri, the Republican states will argue that Biden’s cancellation plan is “not remotely tailored to address the effects of the pandemic on federal student loan borrowers”, as required by the 2003 federal law that the administration is using as legal justification.
They point out that Biden, in an interview with CBS’s 60 Minutes this month, declared the COVID-19 pandemic over, yet is still using the continuing health emergency to justify the wide-scale debt relief.
“It’s patently unfair to saddle hard-working Americans with the loan debt of those who chose to go to college,” Arkansas Attorney General Leslie Rutledge, who is leading the group, said in an interview with The Associated Press news agency.
She added: “The Department of Education is required, under the law, to collect the balance due on loans. And President Biden does not have the authority to override that.”
The states of Iowa, Kansas, Missouri, Nebraska and South Carolina joined Arkansas in filing the lawsuit. Iowa has a Democratic attorney general, but the state’s Republican governor, Kim Reynolds, signed on the state’s behalf.
The states argue that Missouri’s loan servicer is facing a “number of ongoing financial harms” because of Biden’s decision to cancel loans. Other states that joined the lawsuit argue that Biden’s forgiveness plan will ultimately disrupt revenue to state coffers.
Biden’s forgiveness programme will cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, will get an additional $10,000 of debt forgiven.
The administration also said it would extend the current pause on federal student loan repayments — put on hold near the start of the pandemic more than two years ago — once more through the end of the year.
The administration faced threats of legal challenges to its plans almost immediately, with conservative attorneys general, Republican lawmakers and business-oriented groups asserting that Biden was overstepping his authority in taking such sweeping action without the assent of Congress.
— The White House (@WhiteHouse) September 29, 2022
Democratic lawmakers battling in tough re-election contests also distanced themselves from the student loan plan, as Republican officials called it an unfair government giveaway for relatively affluent people at the expense of those who did not pursue higher education.
In their lawsuit, the Republican attorneys general also contend that the forgiveness programme violates the Administrative Procedures Act, which lays out how federal agencies should make regulations in order to ensure executive branch policies are well-reasoned and explained.
“The president does not have the authority to put himself in the place of Congress,” Rutledge said in the interview. “These actions must be taken by Congress and he can’t override that.”
To justify the plan’s legality, the Biden administration is relying on a post-September 11, 2001, law meant to help members of the military that the Department of Jsutice has said allows Biden to reduce or erase student loan debt during a national emergency.
But Republicans have argued the administration is misinterpreting the law because, in part, the pandemic no longer qualifies as a national emergency.
Another lawsuit against Biden’s student loan programme was filed this week in an Indiana federal court by the Pacific Legal Foundation, a libertarian legal advocacy group that employs a lawyer who says he would be harmed by the forgiveness plan.
The lawyer, Frank Garrison, says erasing his current debt load will trigger a tax liability from the state of Indiana, which is among at least a half dozen states where the forgiven loan amounts will be subject to state taxes.
The White House dismissed the lawsuit as baseless because any borrower who does not want the debt relief can opt out. The Department of Education is still on track to unveil the application for the forgiveness plan in early October.
Republicans have also seized on the Biden plan’s price tag and its impact on the nation’s budget deficit. The Congressional Budget Office said this week that the program will cost about $400bn over the next three decades. The White House countered that the CBO’s estimate of how much the plan will cost just in its first year, $21bn, is lower than what the administration initially believed.