Republican states file lawsuit to block Biden’s student loan forgiveness plan

Seven Republican-led states filed a lawsuit on Thursday to overturn President Biden’s plan to forgive up to $20,000 in student debt for millions of borrowers, as conservatives advance legal challenges against the one of the administration’s flagship economic policy initiatives.

The new lawsuits come two days after a conservative Indiana attorney filed a separate lawsuit against the administration seeking to reverse the policy. The latest lawsuits — one filed by a six-state coalition and another by Arizona — ask a court to immediately block the pardon program to prevent the Biden administration from writing off loan balances as early as next week.

The Washington Post before reported that GOP attorneys general from states such as Arizona and Missouri had met privately to discuss a strategy that could lead to multiple cases being filed in different courts across the country.

Lawsuit seeks to stop Biden’s student loan forgiveness plan

“Republican officials in these states are championing vested interests and fighting to stop aid to borrowers buried under mountains of debt,” White House spokesman Abdullah Hasan said. “The president and his administration are legally giving working and middle-class families a break as they recover from the pandemic and prepare to resume loan repayments in January.”

The White House policy would forgive up to $10,000 in federal student loan debt for borrowers who earn less than $125,000 a year, or less than $250,000 for married couples, or up to $20,000 for those who have received Federal Pell Grants. The Biden administration has been adamant that it has the legal power to cancel student debt, citing a 2003 law giving the executive branch broad power to overhaul student loan programs.

GOP lawmakers and conservative advocacy groups have pushed back on that claim, arguing that Biden’s move represents an illegal overreach of the executive branch because the 2003 law was created to give the president authority after a disaster like the terrorist attacks of September 11, 2001. Instead, Republicans such as Sen. stands” before the court or the grounds for taking legal action.

The Indiana lawyer pursuing the policy said he has standing because canceling the debt could drive up his state tax bill, since Indiana plans to impose the relief federal debt as a form of income. White House press secretary Karine Jean-Pierre dismissed that claim on Tuesday, telling reporters that “anyone who doesn’t want debt relief can walk away.”

On Thursday, a federal judge denied the Indiana attorney’s request for a preliminary injunction in the case, citing the opt-out provision. He gave the lawyer time to amend the lawsuit.

State lawsuits take a different approach, arguing that debt cancellation will hurt them in many ways.

One of the complaints – filed by Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolinapoints out that Missouri’s student loan manager, which is part of its state government, could see its revenue decline as borrowers are likely to consolidate their loans under the federal Family Education Loans program.

On Thursday, however, the administration said it would exclude FFEL from the loan cancellation program, a movement first reported by Politico. This change could help avoid legal action against the policy. But that will mean that about 770,000 of the more than 40 million otherwise eligible borrowers will not be eligible for relief, an administration official said late Thursday. Some earlier estimates were higher.

Anyone who applied before Thursday to consolidate their FFEL commercial debt into the direct lending program — where loans are made and held directly by the federal government — will be eligible for a forgiveness, according to the department. But everyone with these loans will be excluded for the time being.

“Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, which will enable us to achieve this goal while continuing to explore other legally available options to provide relief to borrowers with private FFEL loans. and Perkins. loans, including whether FFEL borrowers could qualify for one-time debt relief without the need to consolidate,” the Department of Education said in a statement.

Dozens of FFEL commercial borrowers consolidated their loans to qualify for Biden’s debt relief plan after he was announced in August. But earlier this month, the department told borrowers there was no need to take immediate action as the agency would find a way forward.

People with student loans from the old federal program seek relief

That assurance led Christopher Martin, 50, to delay his request to consolidate his $29,341 in student loans. Martin, who lives in Jersey City, was pleased with the low interest rate on his student loan debt, which would have increased had he consolidated. Had he known the administration would impose a consolidation deadline, Martin said he would have applied already.

Martin accused the White House of lying, adding some swear words. “Telling people they don’t necessarily need to consolidate and saying one day you had to consolidate yesterday is just despicable,” he said.

Missouri Attorney General Eric Schmitt, who is also the Republican nominee for a U.S. Senate seat in this fall’s election, said in a statement that the pardon policy would make inflation worse for Americans who don’t get benefits. cancellation of student debt.

“No law authorizes President Biden to unilaterally release millions of individuals from their obligation to repay the loans they have voluntarily taken out,” say six states in their lawsuit.

Tony Romm contributed to this report.

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