Eleven states have filed a lawsuit this week against President Joe Biden’s recent plan to forgive $156 billion in student debt. The lawsuit is a result of the rejection of the president’s reprieve pitch from last year.
Alabama, Alaska, Idaho, Iowa, Kansas, Louisiana, Montana, Nebraska, South Carolina, Texas, and Utah are among the states requesting repayment for the loan forgiveness plan called Saving on a Valuable Education (SAVE), which was introduced by President Biden. These 11 states, most of which supported former Republican President Donald Trump in the 2020 election, are seeking full or partial reimbursement for the forgiveness program, with the exception of one of Nebraska’s congressional districts, which backed Biden, a Democrat.
Last month, President Biden introduced a $156 billion plan, which is a scaled-down version of his previous $430 billion proposal to relieve student debt. Originally, the president aimed to provide $10,000 in federal student loan forgiveness for most borrowers and $20,000 for recipients of Pell Grants.
The Department of Education had to suspend its plans for debt forgiveness after a group of states filed a lawsuit against the original plan. As a result, the department has been working on a revised version of the forgiveness plan.
Kansas Attorney General Kris Kobach criticized President Biden for defying the ruling of the United States Supreme Court and accused him of seizing power from Congress. In a news conference, Kobach emphasized the importance of living in a constitutional republic where the courts have the authority to strike down any illegal or unconstitutional executive act. He expressed his intention to take the matter to court and looked forward to facing the president’s attorneys in the legal battle.
The states have filed a lawsuit seeking to obtain reasonable fees, costs, expenses, and disbursements for the plaintiffs. This encompasses all attorney’s fees related to the litigation and any other necessary relief that the Court deems appropriate.
The 11 states have filed a lawsuit against the Biden administration, claiming that it has violated the principles of America’s separation of powers and exceeded its legal authority. Through this legal action, the states aim to obtain an official declaration that the SAVE plan is unlawful and prevent its implementation.
Under the SAVE plan, around 8 million individuals have the opportunity to benefit from reduced monthly payments or even the possibility of having their entire debt forgiven. This repayment plan takes into account factors such as income, family size, and discretionary income to calculate the monthly loan payments, thereby reducing the overall amount owed for a significant number of people.
Approximately half of the borrowers who meet the eligibility criteria experienced a significant reduction in their monthly payments, resulting in a zero-dollar payment if their hourly wage is below $16.
Despite facing criticism, Biden remains steadfast in his commitment to addressing the issue of student debt, which currently exceeds $1.7 trillion nationwide.
“On X this week, Biden expressed his commitment to repairing the flawed student loan programs and ensuring that higher education serves as a pathway to the middle class instead of creating obstacles to opportunity,” Biden stated.
Experts are expressing skepticism about the potential impact of a new lawsuit on President Biden’s student debt forgiveness plan, despite the Supreme Court’s previous ruling against his initial proposal.
According to Michael Lux, attorney and founder of Student Loan Sherpa, the chances of success for the states in this lawsuit are significantly lower compared to the one-time forgiveness case.
States may face difficulties in establishing legal standing, particularly when it comes to Biden’s new SAVE repayment plan, according to Lux.
According to Lux, the Department of Education has a stronger legal basis to establish the SAVE plan compared to the argument for one-time forgiveness. He explains that in the case of one-time forgiveness, the government justified its actions based on disaster legislation enacted after 9/11. However, in the context of the SAVE plan, the government can assert that Congress explicitly authorized the creation of income-driven repayment plans and delegated the responsibility to the Department of Education to define the specifics of the program.
According to Robert Farrington, the founder of The College Investor, he shared the same sentiment.
According to Farrington, the SAVE plan is essentially a rebranding of the previous RePAYE plan. He explains that the changes made to the plan are simply rule changes that are within the scope of the existing regulations.
The challenge of blocking things becomes even more unlikely. Moreover, considering that millions of Americans are already enrolled in the SAVE plan and have even received loan forgiveness through it, changing it could pose significant difficulties.
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