States Sue to Stop Biden Loan ‘Forgiveness’ Program: ‘Unwise,’ ‘Unfair,’ and ‘Unlawful’

Nebraska, Missouri, Arkansas, Kansas, Iowa, and South Carolina joined together to file a lawsuit against the Biden administration on Thursday in an attempt to stop the president’s announced student loan-forgiveness program from taking effect.

“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,” argued the plaintiffs in their filing.

The administration has said that it will wipe out up to $10,000 in loans for borrowers making under $125,000 per year, and up to $20,000 for Pell Grant recipients who meet that criteria. Married persons filing jointly will be able to take advantage of the new benefit if their income does not exceed $250,000.

While President Biden has styled the program as a “targeted” effort to help “families who need it the most — working and middle-class people hit especially hard during the pandemic,” the Republican officials trying to stop its implementation dispute that characterization, citing a Wharton School study that found that the majority of would-be beneficiaries count themselves among the top 60 percent of earners.

The attorneys general spearheading the legal challenge also submit that “no statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed.”

Biden has argued that he is able to unilaterally cancel student debt to mitigate the economic effects of the coronavirus pandemic. Specifically, a Department of Education memo released by his administration asserts that the HEROES Act,  which passed in 2003 and allows the secretary of education to provide student-debt relief “in connection with a war or other military operation or national emergency,” provides the legal basis for the cancellation. But, as the plaintiffs pointed out, Biden declared in a recent 60 Minutes interview that “the pandemic is over.”

Moreover, they argue that the HEROES Act was designed to allow the secretary to provide relief in individual cases with proper justification.

“The [HEROES] Act requires ED [Education Department] to tailor any waiver or modification as necessary to address the actual financial harm suffered by a borrower due to the relevant military operation or emergency… This relief comes to every borrower regardless of whether her income rose or fell during the pandemic or whether she is in a better position today as to her student loans than before the pandemic,” reads their legal brief.

The filing comes after the Pacific Legal Foundation filed its own lawsuit against the administration on Tuesday.

“The administration has created new problems for borrowers in at least six states that tax loan cancellation as income. People like Plaintiff Frank Garrison will actually be worse off because of the cancellation. Indeed, Mr. Garrison will face immediate tax liability from the state of Indiana because of the automatic cancellation of a portion of his debt,” wrote PLF in their own brief.

The state-led lawsuit was filed in a federal district court in Missouri, and asks that the court “temporarily restrain and preliminarily and permanently enjoin implementation and enforcement of the Mass Debt Cancellation,” and declare that it “violates the separation of powers established by the U.S. Constitution,” as well as the Administrative Procedure Act.

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