States File Lawsuits Against the US Government Over Third Student Loan Plan
A coalition of states is suing the U.S. government over its third attempt at cancelling student loans, a week after the previous one was blocked by the Supreme Court.
The Republican seven-state coalition has accused the Department of Education of secretly attempting to “mass cancel hundreds of billions of dollars of loans,” starting Sept. 3, but possibly Sept. 7, according to the lawsuit.
Missouri alleges they have uncovered documents stating “unlawful forgiveness of $73 billion overnight, with hundreds more billions in losses to follow.”
Student loan relief has been a part of U.S. President Joe Biden’s campaign promise to relieve 43 million Americans of debt and has also been a divisive issue between Republicans and Democrats.
The Missouri-led coalition, which includes Georgia, Alabama, Arkansas, Florida, North Dakota, and Ohio, is determined to block the third attempt at student loan cancellation.
Missouri Attorney General Andrew Bailey stated, “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.”
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The nation’s highest court in June 2023 struck down a broad $400 billion (£303 billion) student loan debt forgiveness plan initially announced by Biden in August 2022, after it had been challenged by several Republican states led by Missouri.
The Biden administration then initiated a second program called the Saving on a Valuable Education (SAVE) plan, calling it “the most affordable repayment plan ever created.”
The SAVE plan aimed to extend payment periods and potentially forgive debts of up to $12,000 (£9,100), with 8 million people reportedly signing up for it.
In April, a Missouri-led coalition of states sued the Biden administration again, arguing that Biden had exceeded his authority. The Eighth Circuit Appeals Court that governs the region of Missouri where the lawsuit was filed, halted it on grounds that they would probably be able to prove the plan is in violation of the major questions doctrine.
The major questions doctrine is a safety measure laid out by the Supreme Court based on the understanding that Congress often tends to delegate authority on certain decisions to agencies, but if an agency seeks to decide on an issue of national significance this responsibility should be sent back to Congress.
On Aug. 28, the Supreme Court declined to reinstall the frozen SAVE plan.
Bailey argues that the latest plan is the same as the previous two.
An Education Department spokesperson declined to comment on the case but stressed it “will continue to fight for borrowers across the country who are struggling to repay their federal student loans.”
“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,” the states say in their lawsuit.
“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.”
Reuters contributed to this report.
