Second Lawsuit Challenging Biden’s Student Loan Plan Lands in Federal Court

The second of what is expected to be several challenges to the legality of President Biden’s plan to forgive hundreds of billions of dollars’ worth of student debt because of the Covid pandemic was filed in federal court Thursday by GOP state officials who say the president exceeded his authority when he promised to spend taxpayer money on the handout. A federal lawsuit filed in Missouri and signed off on by five other states — Iowa, Kansas, Nebraska, South Carolina, and Arkansas — alleges that Mr. Biden’s plan is outside the scope of the 2003 law he cited as justification for the act, which gives the education department the ability to waive student loan repayments for veterans of the War on Terror and victims of other national emergencies.The lawsuit said Mr. Biden’s plan is “not remotely tailored to address the effects of the pandemic on federal student loan borrowers.” Even if it were, the lawsuit says, Mr. Biden has stated publicly — most notably in a recent “60 Minutes” interview — that the Covid pandemic is “over.”“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,” the Republican attorney general of Arkansas, Leslie Rutledge, said. “President Biden does not have the power to arbitrarily erase the college debt of adults who chose to take out those loans.”Observers have been expecting the lawsuits ever since Mr. Biden announced his plan at the end of August, but questioned whether anyone could come forward with a legitimate claim to have been harmed by the executive order, known legally as “standing” in a case. The Supreme Court has ruled that taxpayers footing the bill for the measure, estimated to be at least $400 billion by some analysts, may not sue to block allegedly illegal spending of tax dollars.In an apparent acknowledgment of the legal threats facing the plan, the education department said Thursday that borrowers who owe private companies for their federally backed loans will not be eligible for the forgiveness program. Those businesses, which would lose substantial income if the plan goes through, pose the most direct legal threat to the initiative.Education department officials told Politico that only a small percentage of borrowers would be affected by the ruling. Federal data suggest that, as of June 30, private lenders are sitting on almost $109 billion in loans to 4 million borrowers. In their lawsuit, the states argue that they are being harmed financially by Mr. Biden’s action; in the cases of Missouri and Arkansas, it is because state-managed student loan-servicing companies would collect less interest from student loan borrowers. Nebraska, Iowa, Kansas, and South Carolina argue that state tax proceeds would be reduced because the forgiven debt would not be considered taxable income.The lawsuit is the second against Mr. Biden’s plan in less than a week. On Tuesday, the libertarian-leaning Pacific Legal Foundation filed a lawsuit in Indiana claiming that one of its lawyers, Frank Garrison, would be harmed by the plan. Mr. Garrison says erasing the debt would trigger a state tax liability in Indiana for which he would be personally liable. Mr. Biden’s plan would erase up to $10,000 in student loan debt each for roughly 43 million Americans who borrowed money to attend college. Lower-income borrowers will be eligible for as much as $20,000 in forgiven loans. Additionally, the plan envisions major changes to borrowing programs that allow graduates to repay their loans via fixed payments for a predetermined period of time, known as “income-driven repayment programs.”Mr. Biden’s executive order also extended through the end of the year a moratorium on student loan payments for all borrowers that was put in place at the start of the pandemic.In a letter to lawmakers sent this week, the Congressional Budget Office said extending the moratorium will cost taxpayers $20 billion on top of the roughly $200 billion it has cost since the spring of 2020. Overall, by its accounting, the forgiveness plan will cost taxpayers an estimated $400 billion. Other independent estimates have put the price tag at as much as $1 trillion over the next decade. In their lawsuit, the Republican attorneys general also argue that the president’s action violates the Administrative Procedure Act regulating how federal agencies issue their mandates. They also said the president lacks the authority to unilaterally embark on such a spending spree without the authority of Congress, which under the Constitution is the primary arbiter of federal spending.“The president does not have the authority to put himself in the place of Congress,” Ms. Rutledge told the Associated Press. “These actions must be taken by Congress and he can’t override that.”In an email sent to student loan borrowers Thursday, the education department said it was on track to release details of the forgiveness plan in early October. The email explained how borrowers may apply for the program and noted that applicants will not need to provide any supporting documentation.

Second Lawsuit Challenging Biden’s Student Loan Plan Lands in Federal Court

More from the New York Sun

Let Some Oil Tankers Sail Through the Strait of Hormuz — World Oil Prices Will Retreat Big Time

‘What Is Chabad Exactly?’

On Taxes in New York, It’s Mamdani v. Hochul

‘Hoppers’ is the Best Pixar Film of the Decade

Florida Senate Advances Bill To Let State Leaders Designate Groups as Terrorists After Federal Judge Blocks Effort by DeSantis

One Week In, Will Trump and Netanyahu Have Time To Finish Reshaping the Mideast and the World?

State Department Says Charter Flights Are Evacuating Hundreds of Americans Stranded in Middle East

Mayor Mamdani’s Wife Liked Posts Cheering on Hamas’s October 7 Massacre: Report