States Sue Federal Government Again Over Student Loan Cancellation

President Joe Biden arrives to speak during an event to announce that his administration has approved $1.2 billion in student debt cancellation for almost 153,000 borrowers at the Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. Andrew Caballero-Reynolds/AFP via Getty Images

Seven states filed suit against the federal government on Sept. 3 for allegedly moving forward with student loan cancellation after the Supreme Court blocked a prior loan forgiveness plan.

As vice president, Democratic presidential nominee Kamala Harris has supported President Joe Biden’s efforts to forgive student loan debt.

In April, the White House said Biden “has worked to fix the student loan system and make sure higher education is a ticket to the middle class—not a barrier to opportunity—because he knows that debt cancellation not only benefits borrowers, it benefits the entire economy.”

Former President Donald Trump criticized Biden’s student loan forgiveness plans at a campaign rally in June.

“He did that with the tuition, and that didn’t work out too well; he got rebuked,” the Republican presidential candidate said, in an apparent reference to the Supreme Court’s June 2023 ruling striking down Biden’s previous $400 billion student loan forgiveness plan.

The new lawsuit led by Missouri was filed in U.S. District Court for the Southern District of Georgia.

The legal action comes after the Supreme Court on Aug. 28 turned down Biden’s request to reinstate a $475 billion student loan relief plan that the U.S. Court of Appeals for the Eighth Circuit halted on Aug. 9.

That plan, the SAVE (Saving on a Valuable Education) program that U.S. Education Secretary Miguel Cardona first proposed in August 2022, would reduce monthly payments for millions of eligible borrowers and accelerate loan forgiveness. A reported 8 million borrowers signed up for the program.

The circuit court found that Missouri and six other states challenging the plan would probably be able to prove that the plan violates the major questions doctrine. The doctrine requires courts to presume that Congress doesn’t delegate important policy questions to government agencies.

The circuit court’s sweeping, nationwide injunction temporarily prevents the federal government from forgiving principal or interest on outstanding student loans, blocks a provision halting interest from being calculated on loans, and pauses a provision allowing borrowers to make very low or zero monthly payments that are dependent on income.

Missouri Attorney General Andrew Bailey said the new lawsuit challenges the Biden administration’s “third and weakest attempt to mass-cancel student loans in the dark of night without letting Congress—or the public—know about it.”

“We successfully halted their first two illegal student loan cancellation schemes; I have no doubt we will secure yet another win to block the third one,“ he said. ”They may be throwing spaghetti at the wall to see what sticks, but my office is meeting them every step of the way.”

The plaintiffs in the lawsuit are Missouri, Georgia, Alabama, Arkansas, Florida, North Dakota, and Ohio. The defendants are the U.S. Department of Education, Cardona, and Biden.

The states say in the legal complaint that they had to act because they “have just uncovered documents proving that the Secretary of Education (1) is unlawfully trying to mass cancel hundreds of billions of dollars of loans, and (2) has quietly instructed federal contractors to ‘immediately’ begin cancellation as early as September 3, 2024 (but possibly beginning on September 7).”

“The actual cost of the Third Mass Cancellation Rule is ... the $146.9 billion estimated by the Department plus much of the $475 billion cost of the SAVE Plan,” the states said.

“This is the third time the Secretary has unlawfully tried to mass cancel hundreds of billions of dollars in loans. Courts stopped him the first two times, when he tried to do so openly. So now he is trying to do so through cloak and dagger.”

The states asked the federal district court for “immediate relief pending further briefing and argument on the merits.”

The Epoch Times asked the U.S. Department of Justice to comment on the new lawsuit but did not receive a reply as of publication time.