A group of Republican-led states has filed a federal lawsuit against the Biden administration to block the implementation of the SAVE Plan, a new student loan repayment program. The plan aims to provide a faster path to loan cancellation and lower monthly payments for millions of borrowers.
The lawsuit, led by 11 states including Kansas, argues that President Biden exceeded his authority in creating the SAVE Plan. It contends that the plan is similar to Biden's previous attempt at student loan cancellation, which was deemed illegal by the Supreme Court last year.
The Education Department, while refraining from commenting on the lawsuit, highlighted that it has the authority, granted by Congress in 1993, to define income-driven repayment plans.
The Biden administration remains committed to supporting borrowers and providing relief, despite legal challenges from Republican states. The SAVE Plan, introduced in 2022, has already enrolled over 7.7 million borrowers, with more than 150,000 loans canceled.
The lawsuit, filed electronically in federal court in Kansas, seeks to halt the plan immediately. It is supported by states such as Alabama, Alaska, Texas, and others.
Biden's repayment plan offers more generous terms than previous income-based plans, reducing monthly payments for more borrowers and allowing loan cancellation in as little as 10 years. The plan prevents interest from accruing as long as borrowers make regular payments.
The states opposing the plan argue that it will discourage borrowers from pursuing public service careers and could lead to challenges in recruiting and retaining teachers in public schools. They also express concerns about potential fraud and the economic impact of injecting billions of dollars in loan relief.
If successful, the lawsuit could impact the Biden administration's efforts to provide widespread student loan relief. Despite legal hurdles, the administration continues to explore avenues for mass loan cancellation through alternative justifications.
