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Six GOP-led states sue Biden administration over student loan forgiveness plan

It's the second lawsuit filed this week against the president's student debt cancellation program, which is expected to be implemented in October.
Image: student loan debt activists outside White House
George Washington University student Tuana Gitonga and other student loan debt activists rally outside the White House, on Aug. 25, 2022.Craig Hudson / The Washington Post via Getty Images file

WASHINGTON — Top lawyers representing a half-dozen Republican-led states sued the Biden administration in federal court Thursday over its student loan forgiveness plan, seeking to block its expected implementation next month.

The states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — jointly filed a 36-page complaint in the U.S. District Court for the Eastern District of Missouri, the second legal challenge this week against President Joe Biden's debt cancellation plan.

Their lawsuit echoes some of the arguments made in a complaint filed Tuesday in Indiana by a lawyer who works for a conservative-learning law firm.

Attorneys general or solicitors general from the six states argued in the suit that the president's plan violates the separation of powers and a law that dictates how federal agencies can craft regulations. They also predicted that it will financially harm them, saying, for example, that the mass debt cancellation would cost Nebraska, Iowa, Kansas and South Carolina tax revenue.

"In addition to being economically unwise and downright unfair, the Biden Administration’s Mass Debt Cancellation is yet another example in a long line of unlawful regulatory actions," they wrote. "No statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed."

They pointed to remarks House Speaker Nancy Pelosi, D-Calif., made in 2021 in which she stated that the president didn't have the authority to authorize a mass cancellation of student debt without congressional action. When Biden announced the plan in late August, however, Pelosi applauded the move, calling it "a strong step in Democrats’ fight to expand access to higher education and empower every American to reach fulfillment."

The lawyers also questioned the Biden administration's reliance on a 2003 law as its justification for the president's unilateral action to wipe away debt for millions of people. The post-9/11 federal measure was aimed at helping military servicemembers by giving the education secretary power to waive certain rules connected to student loan programs during wars or a national emergency.

The Biden administration used the law for the debt cancellation because officials have suggested that the relief is needed to alleviate the economic effects of the Covid pandemic.

"It is inconceivable, when it passed the HEROES Act, that Congress thought it was authorizing anything like the Administration’s across-the-board debt cancellation, which will result in around half a trillion dollars or more in losses to the federal treasury," the lawsuit said.

The lawyers also argued that the administration's justification is nonsensical because Biden recently declared in a CBS News "60 Minutes" interview that the pandemic was over.

The six states want the court to permanently prohibit implementation and enforcement of the president's plan. While Iowa's attorney general, Tom Miller, is a Democrat, the state is led by Republican Gov. Kim Reynolds.

In a statement to NBC News, White House assistant press secretary Abdullah Hasan said, "Republican officials from these six states are standing with special interests, and fighting to stop relief for borrowers buried under mountains of debt. The President and his Administration are lawfully giving working and middle class families breathing room as they recover from the pandemic and prepare to resume loan payments in January."

Under Biden's plan, borrowers who earn less than $125,000 a year, or $250,000 for couples who file taxes jointly, will be eligible for debt cancellation. Pell Grant recipients, who make up the majority of student loan borrowers, will be eligible for an additional $10,000 in debt relief, for a total of $20,000.

The nonpartisan Congressional Budget Office on Monday estimated Biden's plan would cost about $400 billion, while the Department of Education on Thursday said the price tag would be closer to $379 billion.

The Department of Education is expected to make the application to seek the relief available to borrowers starting in October.