Student record

GOP states sue Biden administration over student loan plan

WASHINGTON (AP) — Six Republican-led states are suing the Biden administration to end its plan to forgive student loan debt for tens of millions of Americans, accusing it of overstepping its powers executives.

This is at least the second legal challenge this week to the sweeping proposal put forward by President Joe Biden in late August, when he said his administration would forgive up to $20,000 in education debt for scores of borrowers. The announcement, after months of internal deliberation and lobbying by liberal activists, became immediate political fodder ahead of November’s midterm elections while fueling conservative arguments on legality.

At the time the lawsuit was filed, the Biden administration quietly reduced the rules for eligibility for debt relief, eliminating a relatively small group of borrowers who are the subject of legal debate under the the pursuit. Those borrowers, whose loans are federally guaranteed but held by private banks — a relic of outdated lending programs — are now ineligible for Biden’s debt forgiveness, the Education Department said. .

In the lawsuit, filed Thursday in federal court in Missouri, Republican states argue that Biden’s cancellation plan is “not remotely suited to address the effects of the pandemic on federal student loan borrowers,” as required by the 2003 federal law that the administration uses as legal justification. They point out that Biden, in an interview with CBS’s “60 Minutes” this month, declared an end to the COVID-19 pandemic, but still uses the ongoing health emergency to justify debt relief to large scale.

“It is patently unfair to burden hard-working Americans with the debt of those who chose to go to college,” Arkansas Attorney General Leslie Rutledge, who leads the group, said in an interview. .

She added: “The Department of Education is required by law to collect the balance due on the loans. And President Biden doesn’t have the power to override that.

The states of Iowa, Kansas, Missouri, Nebraska and South Carolina have joined Arkansas in filing a lawsuit. Iowa has a Democratic attorney general, but the state’s Republican Governor, Kim Reynolds, signed on behalf of the state. States contends the Missouri loan manager faces a “number of ongoing financial harms” due to Biden’s decision to cancel the loans. Other states that have joined the lawsuit argue that Biden’s pardon plan will ultimately disrupt state coffers revenue.

In particular, the lawsuit alleges that the Missouri loan servicer will lose income from loans it holds under the federal Family Education Loan Program – a program that allowed private banks to issue and service federally backed student loans until the program was disbanded in 2010.

The Department of Education updated its website Thursday saying borrowers with federal loans held by private banks, including the FFEL program and Perkins loans, will now not be eligible unless they have already consolidated their loans into the government’s direct lending program before Thursday. The change will reverse the eligibility of about 770,000 borrowers, the department said.

“Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, which will enable us to achieve this goal while continuing to explore other legally available options to provide relief to borrowers with private FFEL loans. and Perkins. ready,” the ministry said in a statement.

Still, the administration has long said it is confident the pardon program will survive legal challenges.

“Republican officials in these six states are championing vested interests and fighting to stop aid to borrowers buried under mountains of debt,” White House spokesman Abdullah Hasan said Thursday. “The President and his administration are legally giving working and middle-class families a break as they recover from the pandemic and prepare to resume loan repayments in January. ”

Biden’s forgiveness program will forgive $10,000 in student loan debt for those earning less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate greater financial need, will get an additional $10,000 in debt forgiveness.

The administration also said it would extend the current pause on federal student loan repayments — put on hold around the start of the pandemic more than two years ago — once again until the end of the month. year.

The administration almost immediately faced threats of legal challenges to its plans, with conservative lawyers, Republican lawmakers and business-minded groups arguing that Biden was overstepping his authority by taking such sweeping steps without congressional consent.

Democratic lawmakers who have fought tough re-election contests have also distanced themselves from the student loan plan, as Republican officials have called it an unfair government giveaway for the relatively well off at the expense of those who did not pursue it. of higher education.

In their lawsuit, the Republican attorneys general also argue that the pardon program violates the Administrative Procedure Act, which sets out how federal agencies must establish regulations to ensure executive branch policies are well reasoned and explained. .

“The president doesn’t have the power to put himself in the shoes of Congress,” Rutledge said in the interview. “These actions must be taken by Congress and it cannot override that.”

To justify the legality of the plan, the Biden administration relies on a post-September. The Dec. 11, 2001, law intended to help the military that the Justice Department says allows Biden to reduce or forgive student loan debt during a national emergency. But Republicans argue the administration is misinterpreting the law because, in part, the pandemic is no longer considered a national emergency.

Another lawsuit against Biden’s student loan program was filed this week in federal court in Indiana by the Pacific Legal Foundation, a libertarian legal defense group that employs an attorney who says he would be harmed by the plan. of forgiveness. The attorney, Frank Garrison, said erasing his current indebtedness would result in a tax liability from the state of Indiana, which is one of at least half a dozen states where the amounts of the loans forgiven will be subject to state taxes.

A federal judge on Thursday denied Garrison’s request to temporarily block Biden’s plan, saying there was no evidence he would be “irreparably harmed” by the cancellation. Garrison was given until October 10 to revise his argument.

The White House has dismissed the lawsuit as groundless because any borrower who does not want debt relief can opt out. The Department of Education is still on track to unveil the forgiveness plan application in early October, and it sent an email to borrowers on Thursday explaining how to prepare to apply. The email stated that applicants did not have to submit supporting documents.

Republicans have also grasped the price of the Biden plan and its impact on the country’s budget deficit. The Congressional Budget Office said this week that the program will cost about $400 billion over the next three decades. The White House countered that the CBO’s estimate of the plan’s cost in its first year, $21 billion, is lower than the administration initially believed.

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Associated Press writer Collin Binkley contributed to this report.