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Seven Republican-led states have filed the first lawsuit challenging Biden’s broader student loan forgiveness plan.
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The states said Biden planned to implement the emergency measure before final regulations were published.
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They requested that the implementation of the aid be blocked while the legal process is still ongoing.
President Joe Biden’s second attempt at more comprehensive student loan forgiveness recently faced its first legal challenge.
On Tuesday, seven Republican attorneys general filed a lawsuit in the Southern District of Georgia seeking to block Biden’s second attempt at debt restructuring using the Higher Education Act of 1965.
The lawsuit focuses on a plan the Education Department announced last summer after the Supreme Court rejected Biden’s first attempt at broad debt relief. The plan is expected to benefit more than 30 million borrowers. The plan would cancel some or all of their student loans for borrowers with unpaid interest, those who have been paying for at least 20 years and those who went to schools that left them with too much debt relative to their post-graduation earnings, among other things.
The final rule on the relief has yet to be published, and the Department of Education previously announced that it planned to implement the relief in October. However, the lawsuit said the department had been working on implementing the plan before the final rule was published, according to internal documents obtained from the department to service providers, and called on the court to halt the relief pending a final legal decision.
“Not only is this the Secretary’s most aggressive effort,” the lawsuit says. “It is also the weakest to date. The Secretary has already failed to cancel student loans en masse with the two statutes he deemed more plausible. It is therefore not surprising that this third plan rests on the least plausible textual authority to date.”
The GOP-led states said the department planned to roll out the aid as early as September. According to internal documents obtained by the states and included in the lawsuit, the Education Department sent a memo to service provider MOHELA saying that “in September 2024, the Biden-Harris administration will launch the Federal Student Loan Debt Initiative.”
The documents do not reveal what specific elements of the relief, if any, were supposedly implemented in September. However, the lawsuit alleged that the Department failed to follow the rulemaking process by making plans to provide the relief to borrowers before the final rulemaking.
The Department of Education did not immediately respond to a request for comment from Business Insider about this latest lawsuit.
The states also argued that the relief would harm the student loan company MOHELA, which is based in Missouri, one of the states leading the lawsuit. They said MOHELA would lose revenue from forgiven loans, and that the plan would increase administrative costs for the servicer.
The Education Department has yet to comment on how this will affect its plans for broad relief. At the same time, Biden’s new SAVE income-driven repayment plan is being blocked in court after a group of GOP state attorneys general filed a lawsuit seeking to block cheaper payments and debt forgiveness, while more than 8 million enrolled borrowers remain in limbo awaiting a final decision.
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