Republican-led US states sue over new Biden student debt relief plan By Reuters

By Nate Raymond

(Reuters) – Seven Republican-led states filed a lawsuit on Tuesday challenging the latest student debt forgiveness plan from President Joe Biden’s administration, saying the U.S. Department of Education is moving to begin canceling the loans as soon as this week .

The lawsuit comes less than a week after the U.S. Supreme Court rejected the Biden administration’s request to revive another student debt relief plan that was designed to lower monthly payments for millions of borrowers and speed up forgiveness loans for some.

In a lawsuit filed in federal court in Brunswick (NYSE: ), Georgia, state attorneys general sought a rule proposed by the Education Department in April that would have provided federal student loan debt relief for about 27.6 millions of debtors.

Attorneys general in states including Georgia and Missouri say they recently obtained documents showing the Education Department instructed federal loan servicers to begin writing off hundreds of billions of dollars in loans as early as Tuesday or Saturday, before the rule was completed.

That could wipe out at least $73 billion in loans overnight, the suit says, and billions in more debt relief could follow. The states argue that the Department of Education has no authority to grant such debt forgiveness.

“We successfully stopped the first two illegal student loan cancellation schemes; I have no doubt we will secure another victory to block the third,” Missouri Attorney General Andrew Bailey said in a statement.

A Department of Education spokesman declined to comment on the case, but stressed that it “will continue to fight for borrowers across the country who are struggling to repay their federal student loans.” Biden’s department has already approved $169 billion in debt relief for nearly 4.8 million people.

The lawsuit is the latest legal challenge to the Democratic president’s efforts to fulfill a campaign pledge and reduce the debt of millions of Americans who have taken out federal student loans to finance their expensive higher education.

Republican-led states successfully persuaded the conservative 6-3 US Supreme Court in June 2023 to block a $430 billion program backed by Biden that would have canceled up to $20,000 in debt per loaned to up to 43 million Americans.

The administration then pursued another program called the Savings for a Value Education Plan, or SAVE, which was designed to lower monthly payments for millions of borrowers and speed up loan forgiveness for some.

But Republican-led states persuaded a federal appeals court to block that plan, while litigation over it continues. On August 28, the Supreme Court refused to lift this order.

The latest plan relies on a different statute than those, a provision of the Higher Education Act that several leading Democrats, including U.S. Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren, have long argued provides the authority administration to cancel student debt.