Six Republican-led states are suing the Biden administration over its proposal to forgive the student loan debt of tens of millions of Americans.
The states — Iowa, Kansas, Missouri, Nebraska, South Carolina and Arkansas — accuse the administration of overstepping its executive powers without authorization from Congress. Iowa has a Democratic attorney general, but Republican Gov. Kim Reynolds signed on for the state.
President Joe Biden said in August that his administration would write off up to $20,000 in student loan debt for tens of millions of Americans, prompting conservatives to question the legality of the plan and the political motivation of the move as elections loom. midterm elections.
But this week, the administration quietly lowered eligibility requirements for debt relief. Now, borrowers with loans guaranteed by the federal government but held by private lenders are not eligible for debt cancellation, according to the Department of Education.
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The department updated its website Thursday to say that borrowers with federal loans owned by private banks will now be ineligible for Biden’s plan unless they consolidate their loans into the government’s direct loan program by Thursday. The change will affect about 770,000 borrowers, the department said.
The Republican states argue in the lawsuit, filed Thursday in federal court in Missouri, that Biden’s plan is “not remotely designed to address the effects of the pandemic on federal student loan borrowers,” which is required by the 2003 federal law that the administration is using to assert its legality.
The states note that Biden said in an interview last month that the COVID-19 pandemic was over, but continues to use the ongoing health emergency to justify debt relief.
“It is patently unfair to burden hard-working Americans with the loan debt of those who chose to go to college,” Arkansas Attorney General Leslie Rutledge, who is leading the lawsuit, said in an interview.
“The Department of Education is required by law to collect the balance due on loans. And President Biden does not have the authority to override that,” he continued.
The lawsuit says the Missouri loan servicer faces a series of “continuing financial harms” from student loan forgiveness.
The states allege that the Missouri loan servicer will lose proceeds from loans it holds through the Federal Family Education Loan Program, which had allowed private banks to authorize and service federally-backed student loans until the program ended in 2010.
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Other states that have joined the suit argue that the president’s debt relief proposal will ultimately cut off revenue to state coffers.
The administration maintains its belief that the forgiveness program rests on a solid legal foundation.
“Republican officials in these six states are supporting special interests and fighting to stop relief for borrowers buried under mountains of debt,” White House spokesman Abdullah Hasan said Thursday. “The president and his administration are legally giving working and middle-class families a break as they recover from the pandemic and prepare to resume loan payments in January.”
Biden’s plan will write off $10,000 in student loan debt for individuals making less than $125,000 or families making less than $250,000. Borrowers who meet the income limit and received a Pell Grant, aid awarded to the most financially needy applicants, will have a total of $20,000 in debt forgiven.
The administration also said it would extend the current pause on federal student loan payments through the end of the year. This payment hold began near the start of the pandemic.
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Republican officials have criticized the proposal as an unfair government giveaway to the relatively wealthy and one that will cost people who didn’t get a college degree. Democratic lawmakers in tough reelection races have distanced themselves from the student loan forgiveness plan.
The Republican Party has also attacked Biden’s plan for its price and its impact on the nation’s budget deficit. The Congressional Budget Office said this week that the program will cost about $400 billion over the next three decades, but the White House said the CBO’s estimate of the $21 billion the plan will cost in its first year is lower than what management initially expected. .
Associated Press contributed to this report.