Republican States Take Legal Action Against Biden’s Controversial Student Debt Plan

A coalition of Republican-led states is challenging President Biden’s latest student debt relief plan in court, questioning the legality of his approach.

At a Glance

President Joe Biden and Education Secretary Miguel Cardona are facing a lawsuit from several Republican-led states over student loan debt relief plans.
The lawsuit, spearheaded by Missouri Attorney General Andrew Bailey, includes Georgia, Alabama, Arkansas, Florida, North Dakota, and Ohio.
Republican states argue that the Biden administration lacks the authority to cancel student loans without Congressional approval.
This is the third attempt by Biden to implement student loan forgiveness, with previous attempts blocked by courts.
The Supreme Court previously halted a $430 billion debt forgiveness plan in June 2023.

Republican States Sue Biden Administration

Missouri Attorney General Andrew Bailey, joined by his counterparts from Georgia, Alabama, Arkansas, Florida, North Dakota, and Ohio, filed the legal challenge against President Biden and Education Secretary Miguel Cardona. The lawsuit argues that the Biden administration has overreached its powers by attempting to cancel hundreds of billions of dollars in student loans without proper Congressional approval.

This is the third attempt by Biden to cancel student loans, with previous attempts being blocked by courts. The plaintiffs claim this move unlawfully attempts to relieve debt burden through federal loan servicers before the regulation’s official finalization.

Historically, the Biden-Harris administration has faced significant opposition regarding student debt relief. The Supreme Court previously ruled against a $430 billion debt forgiveness plan in June 2023. Following that decision, the Biden administration presented the SAVE plan aimed at reducing monthly payments and accelerating loan forgiveness, which also faced legal challenges from GOP-led states.

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

The Core Legal Arguments

The crux of the lawsuit is the states’ argument that Biden’s efforts to cancel student debt are a violation of executive authority. Missouri Attorney General Andrew Bailey criticized the administration, stating it “unlawfully tried to mass cancel hundreds of billions of dollars in loans.” The Department of Education argues that Congress gave it authority to define repayment plans in 1993, but plaintiffs insist that Biden’s actions lack congressional authorization.

The plaintiffs also argue the new SAVE Plan (Saving on a Valuable Education), intended to reduce monthly payments and forgive loans in as little as ten years, negatively impacts federal student loan servicers and undermines the Public Service Loan Forgiveness program. The plan, which began last year, sees almost 8 million Americans, including 4.5 million low-income borrowers with $0 monthly payments, enrolled. Critics suggest that if it were implemented, the SAVE Plan would deprive agencies like MOHELA of up to 15 years in servicing fees.

Impact on Federal and State Level

The Biden administration contends the changes are essential for providing financial relief to millions of Americans burdened by student debt. Critics argue the plan is a direct challenge to state finances, and circumventing Congress is imprudent. Republican states assert the initiative is effectively an unauthorized grant program that affects their ability to hire and retain employees, particularly those eligible for the Public Service Loan Forgiveness program.

“Once the Final Rule takes effect, however, PSLF will not be nearly as attractive compared to other income-driven repayment programs,” says the lawsuit. “Its comparative advantage will shrink or disappear entirely.” The Education Department plans to place SAVE enrollees in interest-free forbearance while litigation continues, stressing their mission to provide economic relief amid ongoing challenges.

Seven Republican-led states filed a lawsuit to challenge President Joe Biden's administration's latest student debt forgiveness plan, saying the US Department of Education was taking steps to start canceling loans as soon as this week https://t.co/2ED8GbqD2P

— Reuters (@Reuters) September 4, 2024

Conclusion

The Republican-led states’ challenge against Biden’s student debt relief plan underscores the ongoing battle between federal and state powers over financial governance. As this legal struggle unfolds, the debate over student debt forgiveness remains a potent political issue, reflecting deeper divisions about the balance between executive authority and legislative oversight.

Missouri Attorney General Andrew Bailey and his compatriots in this push see it this way: “The Biden-Harris Administration is dedicated to saddling working Americans with Ivy League debt, even if they have to break the law to do it. Our latest lawsuit challenges their third and weakest attempt to mass-cancel student loans in the dark of night without letting Congress—or the public—know about it. That’s illegal.”

The legal injunction against the SAVE Plan and broader student debt relief initiatives will likely persist, affecting millions of Americans’ financial futures until a conclusive legal precedent is established.