Estimated read time: 3-4 minutes
SALT LAKE CITY — Seven Republican-controlled states are pushing back on the Biden administration's latest plan to pay off or reduce student loan balances. Republican lawmakers say Biden's plan would transfer tax dollars from working class Americans to college graduates.
The lawsuit is another attempt to stymie President Joe Biden's campaign promise to cancel student loan debt, and comes a week after the U.S. Supreme Court refused to lift an injunction on the Biden White House's loan repayment plan, known as Saving on a Valuable Education, or SAVE.
The latest lawsuit takes aim at a new rule the Education Department proposed in April. It has not yet been finalized. The agency emailed borrowers updates on the rule and asked those who are not interested in the debt relief program to opt out by Aug. 30.
It would "grant student debt relief to tens of millions of borrowers across the country," according to the Biden administration.
Lawsuit claims Education Department plans to cancel loans unlawfully
The states — Missouri, Georgia, Alabama, Arkansas, Florida, North Dakota, and Ohio — claim they uncovered documents that highlight the Education Department's plans to "unlawfully" cancel hundreds of billions of dollars in loans before the rule is finalized.
Missouri Attorney General Andrew Bailey, leading the lawsuit, said, "We successfully halted their first two illegal student loan cancellation schemes; I have no doubt we will secure yet another win to block the third one," according to a press release.
"They may be throwing spaghetti at the wall to see what sticks, but my office is meeting them every step of the way."
The suit alleges the Education Department planned on implementing the new program without public notice since May. It also claims the federal agency "instructed federal contractors to 'immediately' begin cancellation as early as Sept. 3, 2024."
"The actual cost of the Third Mass Cancellation Rule is thus the $146.9 billion estimated by the Department plus much of the $475 billion cost of the SAVE Plan," Bailey said.
"This is the third time the Secretary has unlawfully tried to mass cancel hundreds of billions of dollars in loans. 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."
Who would the Education Department's new rule help?
The proposed rule would authorize the Education Department to give partial or full debt relief to four groups of borrowers. This includes:
- Individuals owing more now than they did at the start of their loan repayments. The agency has at least 23 million such borrowers, many of whom are Pell Grant recipients.
- Individuals making repayments for at least two decades.
- Individuals eligible for student loan forgiveness but who have not yet applied.
- Individuals graduating from "low-financial-value programs." If an institution fails to uphold the Education Department's standards, students attending the institution may be eligible for loan forgiveness.
According to Axios, an Education Department spokesperson declined to comment on the lawsuit, but said the agency will "continue to follow the law as we work to prepare for possible debt relief this fall, which would only be implemented after the proposed rules first introduced this spring are finalized."
So far, Biden's Education Department has canceled $168.5 billion in student loans for 4.76 million borrowers through five major programs, according to the Center for American Progress.
