Alabama joins Republican states in filing lawsuit against Biden’s student debt repayment scheme

A new lawsuit has been filed by a coalition of Republican-led states against the Biden administration. The lawsuit seeks to prevent the implementation of a student loan repayment plan that aims to expedite loan cancellation and reduce monthly payments for millions of borrowers.

Eleven states, led by Kansas, have filed a federal lawsuit on Thursday, claiming that President Biden exceeded his authority by implementing the SAVE Plan. The plan, which became accessible to borrowers last year, has already granted loan cancellations for over 150,000 individuals.

The lawsuit contends that the new plan is essentially the same as Biden’s previous unsuccessful attempt at student loan cancellation. According to the lawsuit, the Supreme Court had ruled last year that such action was illegal, and the plaintiffs argue that nothing has changed since then.

Student loan forgiveness has been a hot topic of discussion lately, with many borrowers eagerly awaiting relief. In a recent development, it has been announced that $5.8 billion in forgiveness has been approved for 78,000 borrowers. This news comes as a ray of hope for those struggling with their student loan debt. The approval of such a substantial amount of forgiveness demonstrates a recognition of the financial burden faced by borrowers and a step towards providing them with some much-needed relief. This development highlights the ongoing efforts to address the student loan crisis and alleviate the stress faced by borrowers.

In 2022, Biden introduced the SAVE repayment plan, along with another initiative to eliminate up to $20,000 in debt for over 40 million Americans. Although the cancellation plan was halted by the Supreme Court due to lawsuits from Republican states, SAVE was not examined as it was still in the process of being finalized.

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The lawsuit was initiated the day after the White House organized a “day of action” to advocate for the SAVE Plan. According to the Biden administration, over 7.7 million borrowers have already signed up for the plan, with more than 5 million individuals benefiting from reduced monthly payments of $100 or less due to their lower annual incomes.

Kansas Attorney General Kris Kobach has filed a challenge in federal court in Topeka, Kansas, seeking to immediately halt the plan. The lawsuit is supported by Alabama, Alaska, Idaho, Iowa, Louisiana, Montana, Nebraska, South Carolina, Texas, and Utah.

During a news conference at the Kansas Statehouse, Kobach expressed his disapproval of President Biden’s actions, stating, “In a completely brazen fashion, the president pressed ahead anyway. The law simply does not allow President Biden to do what he wants to do.”

The repayment plan introduced by Biden builds upon existing income-based repayment plans that have been offered by the Education Department since the 1990s. These plans were initially established by Congress to assist borrowers facing financial difficulties. They limited monthly payments to a percentage of borrowers’ income and forgave any remaining debt after 20 or 25 years.

The new plan is designed to provide borrowers with more generous terms, aiming to decrease their monthly payments and even potentially cancel their loans within a shorter timeframe of just 10 years. What sets this plan apart from others is its unique feature of preventing interest from accumulating as long as borrowers consistently make their monthly payments.

The Biden administration has accelerated the cancellation of loans for some borrowers, bringing forward the quicker path to cancellation that was originally scheduled to take effect later this summer. The plan’s provisions are being phased in this year, with the aim of providing relief to borrowers burdened by student loan debt.

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According to Biden, the intention behind this initiative is to provide borrowers with some relief and help them alleviate the weight of their student loan debt.

The Education Department chose to amend existing plans through federal regulation instead of starting from scratch. This approach was seen by supporters as a strategic move to strengthen the plan, in anticipation of potential challenges from Republicans.

In the new lawsuit, Kobach argues that Biden should have obtained approval from Congress before implementing such significant changes.

According to the states, Biden’s plan is set to have numerous detrimental effects on them.

The states argue that with such a generous repayment plan, fewer borrowers will be motivated to enter public service and pursue the Public Service Loan Forgiveness program. They predict that this will result in more state employees leaving their jobs, further exacerbating the challenges faced by public schools in recruiting and retaining teachers.

The lawsuit contends that the plan will bring a significant amount of loan relief into the U.S. economy, thereby necessitating states to enhance their fraud protection measures. According to the suit, this plan will open up significant avenues for fraudsters to exploit student debt borrowers, opportunities that would not have existed otherwise.

Biden’s first attempt at widespread student loan relief is hanging by a thread, as a new plan is being pursued by the Education Department. Last year, the Supreme Court blocked Biden’s initial plan, prompting him to order the Education Department to develop a new approach using a different legal basis. If this new plan succeeds, it would effectively eliminate the remaining remnants of Biden’s original student loan relief efforts.

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