Seven states led by Republicans have initiated a legal action against President Joe Biden's administration's most recent initiative to alleviate student debt, alleging that the US Department of Education is preparing to cancel loans as early as this week. This legal action follows the US Supreme Court's recent refusal to reinstate a separate student debt relief plan, which aimed to reduce monthly payments for numerous borrowers and expedite loan forgiveness for some.
In a federal court in Brunswick, Georgia, the attorneys general from states such as Georgia and Missouri have targeted a rule proposed by the Education Department in April, which would allow for the waiver of federal student loan debts for approximately 27.6 million borrowers. These attorneys general claim to have acquired documents indicating that the Education Department has directed federal loan servicers to commence the cancellation of hundreds of billions of dollars in loans before the rule's finalization, potentially resulting in the immediate cancellation of at least $73 billion in loans, with further debt relief potentially following. The states contend that the Education Department lacks the authority to implement such debt forgiveness.
Missouri Attorney-General Andrew Bailey expressed confidence in another legal victory to halt this third student loan cancellation scheme. Meanwhile, a spokesperson for the Education Department declined to comment on the lawsuit but emphasized the department's commitment to supporting borrowers nationwide who are facing difficulties in repaying their federal student loans. Under Biden, the department has already approved $169 billion in debt relief for nearly 4.8 million individuals.
This lawsuit represents the latest legal obstacle to President Biden's campaign promise to provide debt relief to millions of Americans who relied on federal student loans for their higher education. In June 2023, Republican-led states persuaded the conservative majority of the US Supreme Court to block a $430 billion program that would have cancelled up to $20,000 in debt per borrower for up to 43 million Americans. Subsequently, the administration pursued the SAVE plan, designed to lower monthly payments and accelerate loan forgiveness for some borrowers. However, this plan was also blocked by a federal appeals court, and the Supreme Court declined to lift the injunction on August 28.
The current plan is based on a different statute, a provision of the Higher Education Act, which prominent Democrats like US Senate Majority Leader Chuck Schumer and Senator Elizabeth Warren have long argued grants the administration the authority to cancel student debt.
