Republican-Led States Sue to Block Biden Student Loan Debt Relief Plan

The cost of everything in our lives is becoming more and more expensive, and with student loans restarting after a deferment period, many borrowers are having a difficult time making payments.

While President Joe Biden has been an advocate for struggling student loan borrowers, it has been a controversial subject among the masses of whether forgiveness should be granted.

On Tuesday, in the latest student loan news, a coalition of Republican-led states mounted a challenge against the Biden administration's repayment initiative.

Lawsuit Against the SAVE Plan

The SAVE Plan (Saving on a Valuable Education) is a program that aims to expedite the path to loan forgiveness, a strategy that has already resulted in the discharge of debts for over 150,000 borrowers.

Spearheaded by Missouri, seven states have lodged a federal lawsuit on Tuesday, opposing the SAVE Plan, which has emerged as a focal point for conservative opposition following the Supreme Court's nullification of President Biden's initial paln for student loan cancellation. This move resembles a similar lawsuit filed last month by 11 states helmed by Kansas.

The lawsuit states, "Yet again, the President is unilaterally trying to impose an extraordinarily expensive and controversial policy that he could not get through Congress."

Coming hot on the heels of Biden's recent proposal to forgive student loans for millions of borrowers, the lawsuit sets the stage for protracted legal battles yet to unfold. Although the suit does not directly challenge Biden's latest student loan cancellation plan, Missouri's attorney general, the leader behind the lawsuit, has hinted at potential legal action against the new proposal.

In response, the Education Department asserts its authority conferred by Congress in 1993 to define the terms of certain repayment plans, emphasizing their commitment to assisting borrowers despite Republican opposition.

The lawsuit resurrects a legal confrontation between the Biden administration and Missouri, reminiscent of the pivotal role the state played in the Supreme Court's decision overturning the President's previous loan cancellation attempt.

Central to the argument is the potential detriment loan cancellation poses to Missouri's interests, particularly its quasi-state loan servicing entity, MOHELA (Missouri Higher Education Loan Authority), which stands to lose significant revenue from federal student loans.

Notably, Biden's SAVE Plan expedites the existing path to loan cancellation, depriving MOHELA of potential servicing fees over a 15-year period, as per the lawsuit's claims.

The States Behind Missouri

Joining Missouri in this suit are Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma. Launched by the Biden administration last year, the SAVE Plan represents a revamped iteration of existing income-driven repayment plans, offering more favorable terms.

Originating in the 1990s, these plans were devised by Congress to assist borrowers facing financial constraints by capping payments based on income and promising debt cancellation after 20 or 25 years.

Biden's SAVE Plan goes further, slashing monthly payments and extending loan forgiveness to as little as 10 years. Despite its announcement in 2022, the proposal garnered less attention amidst Biden's broader call for widespread loan cancellation.

The plan that was originally planned for July has been fast-tracked, with loan cancellations beginning for certain borrowers as early as February. In addition to the financial impact on MOHELA, the lawsuit argues that Biden's plan exacerbates challenges in hiring and retaining state employees.

According to the lawsuit, the overly generous payment plan offers student loan cancellation to borrowers after 10 years of work in public service.

Latest Initiatives

Meanwhile, separate from the Biden student loan debt relief plan, the President unveiled a new proposal on Monday aimed at providing relief to 30 million Americans burdened by student loans. This proposal targets five categories of borrowers, including those grappling with substantial accrued interest and prolonged repayment periods, along with those facing financial hardship.

Swiftly denounced by Republican critics as an unlawful bypass of Congress, the proposal has reignited debates over executive authority and legislative oversight.

In response to Biden's latest initiative, Missouri Attorney General Bailey took to social media, decrying the proposal as an affront to the rule of law and signaling intent to challenge it in court.

With legal skirmishes intensifying, the fate of Biden's ambitious student loan reform agenda hangs in the balance, subject to judicial scrutiny and political maneuvering in the months ahead.