According to The Washington Post, a group of seven states led by the Republican Party is taking legal action to block President Biden’s policy of forgiving the debts of millions of student loan borrowers.
The lawsuit, spearheaded by Missouri Attorney General Andrew Bailey, is challenging the federal government’s attempt to cancel billions of dollars in loans on a massive scale before the rules are finalized.
The lawsuit alleges that the Department of Education is “illegally attempting to cancel billions of dollars in loans before the rules are finalized.”
Bailey stated in a release that their latest lawsuit challenges the Biden-Harris administration’s “third and most feeble attempt” to stop them from massively canceling student loans without informing Congress or the public.
The lawsuit argues that Education Secretary Miguel Cardona is “secretly” trying to forgive student loan debt, despite being previously halted by the courts twice.
The legal action is related to a new regulation recently introduced by the Department of Education to assist borrowers who are excluded from the current loan forgiveness programs or burdened with unsustainable debts.
Despite the fact that the final implementation of this program is not expected until later this fall, the lawsuit alleges that the Biden administration may start forgiving debts as early as this week.
The attorneys general from these Republican-led states claim that documents they obtained show that the Department of Education instructed federal loan servicers to begin canceling billions of dollars in loans on September 3rd or 7th, before the rules are officially set. These states believe the government has no authority to carry out this plan.
The lawsuit argues that this practice is not only highly unfair but also blatantly violates the regulation prohibiting the Education Secretary from implementing similar rules within 60 days after the plan is announced.
The Education Department’s representative told Newsweek, “The Department of Education declines to comment on pending litigation, but we will continue to fight for borrowers across the country who are working hard to repay federal student loans… and strive to provide support to borrowers and seek affordable repayment options and relief for eligible borrowers.”
In June 2023, the conservative-majority U.S. Supreme Court blocked a $430 billion student loan forgiveness program supported by Biden in a 6-3 decision.
In March of this year, President Biden stated, “Following the Supreme Court’s initial ruling on my administration’s student loan forgiveness program, we are seeking another path to provide debt relief to as many borrowers as possible.” The Biden administration then launched the SAVE program aimed at reducing monthly payments for millions of borrowers and expediting loan forgiveness for some.
However, Republican-led states including Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma convinced the federal appeals court to issue an injunction, arguing that the SAVE program lacks congressional authorization.
On August 28th, the Supreme Court ruled to uphold the appeals court’s injunction.
In August 2022, the Biden administration unveiled a long-awaited student loan forgiveness plan, which stipulated that borrowers with annual incomes below $125,000 could receive a $10,000 loan forgiveness. This unprecedented debt relief initiative reignited debates on the fairness, legality, racial disparities, and wealth gaps associated with student loan forgiveness, a discussion that has been ongoing for two years.
Supporters commonly cite two main reasons for their stance. First, high student loan debt is becoming a heavy burden on middle-to-low-income families in the U.S., severely impeding the wealth accumulation capacity of the younger generation. Second, due to existing income disparities between white and minority families, intergenerational wealth transfer allows white students to receive financial support from their families, whereas minority undergraduate students need help alleviating their families’ financial burden after graduation, widening the racial wealth gap. Minority students often face more severe debt pressures due to high student loan amounts.