A group of seven Republican-led states has filed a lawsuit seeking to block new student loan forgiveness plans proposed by the Biden administration. This legal challenge is the latest in a series of disputes over President Joe Biden's student loan policies and could potentially delay his efforts to provide debt relief before the upcoming November election.
The lawsuit is centered around a set of proposals drafted by the Department of Education following the Supreme Court's rejection of Biden's previous student loan forgiveness program. The new plans aim to offer narrower student loan forgiveness that can withstand legal scrutiny.
One key provision of the proposed rule is the cancellation of accumulated interest for individuals with federal student loan balances exceeding their original borrowing amount. Borrowers earning $120,000 or less annually could have their full interest amount canceled, while others may receive up to $20,000 in debt relief. Approximately 23 million borrowers stand to benefit from the interest cancellation, with an estimated cost of $73 billion.
Despite undergoing a lengthy rulemaking process, the student loan relief proposals have yet to be finalized. The lawsuit alleges that the Department of Education intends to implement some debt relief measures imminently, potentially violating a statute requiring a 60-day waiting period after rule publication.
Missouri Attorney General Andrew Bailey, leading the lawsuit, expressed confidence in blocking the proposed student loan forgiveness plans, citing previous legal victories against similar initiatives by the Biden administration. The Department of Education has refrained from commenting on the ongoing litigation.
While Biden's broader student loan forgiveness initiatives have faced legal setbacks, his administration has still managed to cancel a significant amount of student debt through existing programs. Notably, nearly 4.8 million individuals have had their federal student debt forgiven under Biden, totaling $169 billion. The administration has also facilitated easier access to debt forgiveness for specific groups, including public-sector workers, disabled borrowers, and victims of for-profit college fraud.
