Six states sue President Biden over student loan forgiveness plan
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Six states sue President Biden over student loan forgiveness plan

Six US states Thursday sued President Joe Biden over his recently proposed federal student loan forgiveness plan. The state attorneys generals of Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina alleged in a federal Missouri court that Biden’s federal student loan forgiveness plan is unauthorized and poses economic harm to working class individuals.

The thrust of the lawsuit echoes a September 27 suit from an Indiana resident, which claimed tax liabilities created as a result of the federal student loan forgiveness plan make residents of six states worse off. Both lawsuits ask the court to immediately halt implementation of the plan. The states argue that Biden’s federal student loan forgiveness plan will have dire economic consequences and constitutes an unlawful regulatory action. They cite recent wage and labor data to argue that the plan would have a disproportionate effect on working class and poor individuals. It is the states’ position that “none of the benefit will accrue to those who worked and paid their debts,” but rather to the top 60 percent of income earners in the US.

The lawsuit also alleges that Biden lacks the authority to forgive federal student loans. The Biden administration relied on the HEROES Act, a federal law which allows the Department of Education to waive or modify federal student loan programs in the face of a national emergency, to enact the plan. The administration cited the COVID-19 pandemic as the national emergency which made the HEROES Act applicable. But, the states countered, the pandemic no longer qualifies as a national emergency. Additionally, the states argue that the plan applies to almost all federal loan borrowers, regardless of whether they were negatively impacted by the COVID-19 pandemic.

According to the AP, the White House dismissed the lawsuit as baseless. Until the court rules on the issue, federal student loan borrowers should begin to see packages released as early as next week.