Republican states target Biden student loan forgiveness plan in new lawsuit

Six Republican-led states filed a lawsuit on Thursday against the Biden administration over its plans to cancel up to $20,000 in student loan debt for some borrowers.

The lawsuit, filed in the U.S. District Court for the Eastern District of Missouri, seeks an immediate injunction halting the order and challenges the “Mass Debt Cancellation” proposal as unlawful because there is no statue from Congress authorizing the cancellation of student loan debt.

Attorneys general from Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina also charge that the Education Department’s justification for the debt cancellation — the Higher Education Relief Opportunities for Students Act (Heroes Act) of 2003 — is an illegal justification.

And canceling the student loan debt for some 40 million borrowers — estimated to cost around $400 billion — would hurt the state’s financial and proprietary interests, the attorneys general say.

Arkansas Attorney General Leslie Rutledge (R), who is leading the effort, told The Associated Press it was “patently unfair to saddle hard-working Americans with the loan debt of those who chose to go to college.”

“The Department of Education is required, under the law, to collect the balance due on loans,” she told the AP. “President Biden does not have the authority to override that.”

A spokesperson for the Education Department said, “Republican officials from these six states are standing with special interests and fighting to stop relief for borrowers buried under mountains of debt.”

“The President and his Administration are lawfully giving working and middle class families breathing room as they recover from the pandemic and prepare to resume loan payments in January,” the spokesperson said in a statement.

Earlier this week, public interest firm Pacific Legal Foundation (PLF) filed a lawsuit against the administration, challenging the policy through plaintiff Frank Garrison.

Garrison says he is currently paying off his student loans but would be subject to an expensive tax in the event of debt relief because he lives in Indiana, one of several states that considers debt cancellation taxable income.

In a statement to The Hill on Wednesday, an Education Department spokesperson called the PLF lawsuit “baseless” because anyone can opt out of debt cancellation.

“Opponents of the debt relief plan are trying anything they can to stop this program that will provide needed relief to working families,” the spokesperson said.

For those who make under $125,000 annually, the Biden administration announced in August it would cancel up to $10,000 in student debt per borrower and up to $20,000 for Pell Grant recipients, with applications expected to open up in October.

To justify the policy, the administration cited the Heroes Act, which allows the Education Department to waive or modify statutes or provisions related to student financial assistance programs during war or national emergencies, with the COVID-19 pandemic being a justification for debt cancellation.

In a Thursday press release, Nebraska Attorney General Doug Peterson (R) said that when Congress passed the Heroes Act, it never “thought it was authorizing the President to unilaterally decree something like the Mass Debt Cancellation, which will result in around half a trillion dollars in losses to the federal treasury.”

“The Mass Debt Cancellation is not remotely tailored to address the effects of the pandemic on federal student loan borrowers,” Peterson wrote. “It is unlawful and arbitrary agency action, and it should be immediately set aside.”

The lawsuit from the attorneys general notes the relief money has nothing to do with the COVID-19 pandemic and also cited Biden’s “60 Minutes” interview this month in which he declared the pandemic was over.

It also challenges loan cancellation based on the Administrative Procedures Act, which governs how federal agencies can issue and determine regulations, arguing the debt relief is a violation of the law and the “epitome of unlawful and arbitrary agency action.”

—Updated at 3:46 p.m.