Lawsuit Filed by 11 GOP States to Block Repayment Reform, Preventing Debt Relief for Thousands of Student Loan Borrowers

 

    • Eleven GOP state attorneys general filed a lawsuit to block the SAVE income-driven repayment plan.
    • They argued that the shortened timeline for debt relief through the plan is unconstitutional.
    • An Education Department official said Congress allows the authority to set terms for income-driven repayment.

The lawsuits against President Joe Biden’s student-debt relief efforts have resurfaced.

Eleven state attorneys general, with Kansas’ Kris Kobach at the helm, have taken legal action to prevent the implementation of Biden’s SAVE income-driven repayment plan. This plan, which was introduced earlier this year, aims to provide borrowers with more affordable monthly payments and expedite their path to financial relief.

A lawsuit has been filed in Kansas’ district court against President Biden and Education Secretary Miguel Cardona. The lawsuit argues that it is necessary to take legal action in order to prevent the defendants from disregarding the law and ignoring Supreme Court decisions. This refers specifically to the Supreme Court’s recent ruling that struck down Biden’s initial attempt to provide widespread student loan forgiveness through the HEROES Act of 2003.

During a Thursday press conference, Kobach expressed his strong opposition to the Biden administration’s actions, stating, “Once again, the Biden administration has chosen to take from the less privileged and distribute to the more affluent. It is unfair to burden individuals who did not pursue higher education or who diligently worked their way through college with the responsibility of repaying the excessive student loans accumulated by others. This alliance of Republican attorneys general is committed to intervening and preventing Biden’s proposed measures.”

In a surprising move, the Education Department recently enacted a key component of the SAVE plan ahead of its scheduled timeline. This provision entails providing $1.2 billion in debt relief to a staggering 153,000 borrowers. These borrowers had originally taken out loans amounting to $12,000 or less and had made as few as 10 years’ worth of qualifying payments. However, a lawsuit was filed, claiming that this relief was a direct violation of the Supreme Court’s ruling. Consequently, the plaintiffs sought a federal court’s intervention to declare the SAVE plan unconstitutional and enforce repayment obligations for the borrowers.

According to an Education Department official, the department has been given the authority by Congress to define the terms of income-driven repayment plans since 1993. The official stated that the SAVE plan is the fourth instance where the department has exercised this authority. Although the official did not comment on the pending litigation, it highlights the department’s long-standing role in shaping income-driven repayment plans.

According to a spokesperson, the Biden-Harris Administration has been actively working to address the issues plaguing the student loan system. Their efforts have resulted in the creation of an unprecedented student loan repayment plan that aims to make education more affordable. By reducing monthly payments and putting a cap on interest rates, this plan offers protection to millions of borrowers. Moreover, it strives to expedite the process of debt forgiveness, bringing borrowers closer to financial freedom. The administration remains committed to providing assistance and relief to borrowers nationwide, despite facing opposition from Republican elected officials.

The lawsuit draws various comparisons between the debt relief plan that was rejected by the Supreme Court and Biden’s current proposal. However, it is important to note that the legal basis for these two plans differs significantly. In his initial attempt, Biden sought to provide broad student-loan forgiveness by canceling up to $20,000 in debt for borrowers earning less than $125,000 annually. This plan was based on the HEROES Act, a law that grants the education secretary the authority to waive or modify borrowers’ balances during national emergencies, such as a pandemic.

The SAVE plan, however, underwent a process mandated by the Higher Education Act called negotiated rulemaking. This process involves negotiations with stakeholders and allows for public comment before the plan is finalized. Currently, the Education Department is in the process of negotiating rules for its second attempt at implementing a more comprehensive form of debt relief.

The Education Department has not yet responded to the lawsuit. Currently, borrowers who have received relief through SAVE are not affected, and they can still enroll in the plan.

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MBS Staff
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