The lawsuit contends that the new plan is essentially the same as Biden’s initial effort to cancel student loans, which was previously rejected by the Supreme Court. According to the lawsuit, “Last time Defendants tried this, the Supreme Court stated that this action was illegal. Nothing has changed since then.”
The Education Department has chosen not to provide a comment on the lawsuit. However, it is worth mentioning that in 1993, Congress granted the department the power to establish the parameters of income-driven repayment plans.
In 2022, Biden introduced the SAVE repayment plan, along with another initiative aimed at eliminating up to $20,000 in debt for over 40 million Americans. Although the cancellation plan faced opposition and was blocked by the Supreme Court due to lawsuits from Republican states, the court did not review the SAVE plan, which was still under development.
This week, a new lawsuit has been filed, coinciding with the White House’s “day of action” to promote the SAVE Plan. According to the Biden administration, over 7.7 million borrowers have already enrolled in the plan, with more than 5 million individuals experiencing a reduction in their monthly payments to $100 or less due to their lower annual incomes.
Kansas Attorney General Kris Kobach has filed a challenge electronically in federal court in Kansas. He has requested that any trial regarding the case be held in Wichita, which happens to be the largest city in the state. The main objective of the lawsuit is to immediately halt the proposed plan. In addition to Kansas, the lawsuit is supported by several other states including Alabama, Alaska, Idaho, Iowa, Louisiana, Montana, Nebraska, South Carolina, Texas, and Utah.
During a news conference at the Kansas Statehouse, Kobach expressed his strong disapproval of the president’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.”
According to the new lawsuit, Kobach argues that making significant changes like that required Biden to seek approval from Congress.
The states are asserting that Biden’s plan will cause harm to them in numerous ways.
The states argue that the generous repayment plan will discourage borrowers from pursuing the Public Service Loan Forgiveness program, as they will have less incentive to go into public service. They predict that this will lead to a higher turnover rate among state employees and exacerbate the challenges public schools face in recruiting and retaining teachers.
According to the lawsuit, proponents of the plan claim that it will bring a significant amount of loan relief into the U.S. economy. However, they also argue that this would necessitate the states to enhance their efforts in preventing fraud. The suit asserts that the plan could potentially open up new avenues for fraudsters to exploit student debt borrowers.
If successful, it would effectively eliminate the final remaining piece of Biden’s initial effort to provide widespread relief for student loans. Following the Supreme Court’s rejection of his broader plan last year, Biden directed the Education Department to develop a new strategy based on a different legal rationale. The department is currently working towards implementing a more restricted plan for the mass cancellation of student loans.
