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Six states sue Biden administration over student loan forgiveness

© iStock - William_Potter
Kim Jarrett

(The Center Square) – Six states are suing the Biden administration over its plans to cancel millions of dollars in student loans.

President Joe Biden announced his plan last month to cancel $10,000 in student loans for those who meet certain income requirements and $20,000 for students who received Pell Grants who met the same requirements. 

The lawsuit was filed Thursday in U.S. District Court for the Eastern District of Missouri by the attorneys general of Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina. It accuses the Biden administration of violating federal law including "the constitutional principle of separation of powers and the Administrative Procedure Act when he skirted congressional authority to implement this policy.

"No statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed," the lawsuit said. "Just months ago, the Supreme Court warned federal agencies against 'asserting highly consequential power beyond what Congress could reasonably be understood to have granted' by statute. Yet the Administration’s Mass Debt Cancellation does precisely that."

Biden's claims that student loan borrowers were adversely affected by the pandemic are disingenuous because student loan payments were suspended, the attorneys general said in the lawsuit.

"Since most borrowers during the pandemic missed no payments (because none were due), and most borrowers during the pandemic accrued no interest (because the interest rate has been 0 percent), and credit reporting bureaus during the pandemic have been reporting student loans as being on time and the underlying loans as being current (acting to increase an individual’s credit score), there is no pandemic-caused harm in relation to most borrowers’ student loans," the attorneys general said. "In fact, 80 percent of all student loan borrowers saw their credit scores increase during the pandemic, with the largest increases among borrowers with delinquent loans at the beginning of the pandemic."

The attorneys general are asking the court to cancel the student loan forgiveness plan on the grounds it violates the separation of powers under the U.S. Constitution and the Administration Procedure Act. 

“President Biden’s unlawful political play puts the self-wrought college-loan debt on the backs of millions of hardworking Americans who are struggling to pay their utility bills and home loans in the midst of Biden’s inflation,” Arkansas Attorney General Leslie Rutledge said in a statement. “President Biden does not have the power to arbitrarily erase the college debt of adults who chose to take out those loans.”