The lawsuits challenging President Joe Biden’s student loan reduction plans have returned.
On Thursday, 11 state attorneys general, led by Kansas’ Kris Kobach, filed a lawsuit to suspend Biden’s SAVE income-driven repayment plan, which was adopted over the summer to provide debtors with lower monthly payments and a quicker deadline for relief.
The lawsuit, filed in Kansas district court against Biden and Education Secretary Miguel Cardona, stated that the “lawsuit is now necessary to prevent defendants from continuing to flout the law, which includes ignoring Supreme Court decisions,” referring to the high court’s decision at the end of June to strike down Biden’s first attempt at broad student-loan forgiveness under the HEROES Act of 2003.
“Once again, the Biden administration has decided to steal from the poor and give to the rich,” Kobach stated at a Thursday press conference. “He is forcing folks who did not attend college or who worked their way through college to pay for the loans of those who incurred massive student debt.” This coalition of Republican attorneys general will stand in the gap and stop Biden.”
Last month, the Education Department implemented an early SAVE plan provision: $1.2 billion in debt reduction for 153,000 borrowers who borrowed $12,000 or less and paid as few as ten years of eligible payments. The lawsuit claimed that the relief was “in defiance of the Supreme Court” and requested that the federal court declare the SAVE plan unconstitutional and compel borrowers to pay.
An Education Department official told Business Insider that while the department does not comment on pending litigation, “Congress gave the US Department of Education the authority to define the terms of income-driven repayment plans in 1993, and the SAVE plan is the fourth time the Department has used that authority.”
“From day one, the Biden-Harris Administration has been fighting to fix a broken student loan system, and part of that is creating the most affordable student loan repayment plan ever that is lowering monthly payments, protecting millions of borrowers from runaway interest, and getting borrowers closer to debt forgiveness faster,” said a senior administration official. “The Biden-Harris Administration won’t stop fighting to provide support and relief to borrowers across the country—nno matter how many times Republican-elected officials try to stop us.”
While the case draws some parallels to the debt relief plan that the Supreme Court overturned, the legal basis for the two plans is different. Biden’s first attempt at broad student-loan forgiveness would have canceled up to $20,000 in debt for borrowers earning less than $125,000 per year under the HEROES Act, a law that allows the education secretary to waive or modify borrowers’ balances in response to a national emergency, such as a pandemic.
On the other hand, the Higher Education Act authorized negotiated rulemaking, a procedure that involves stakeholder agreements and public comment before implementation, for the SAVE proposal. The Education Department is currently going through the negotiated rulemaking process for its second effort at broader debt relief.
The Education Department has not yet filed a response to the suit. Borrowers who obtained relief through SAVE are now unaffected, and membership in the plan can continue.
