Six states have collectively filed suit to block the loan forgiveness program of President Joe Biden. These states are Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina. According to the program, those earning less than $125,000 or households with less than $250,000 in income will have $10,000 in student loan debt. An additional $10,000 in debt forgiveness will be provided to Pell Grant recipients, who generally have greater financial needs.
Similarly to the other lawsuits, plaintiffs argue that the president cannot cancel student loans en masse unilaterally. They highlight that Speaker Nancy Pelosi stated that it is solely the power of Congress to do so. Two bills that could forgive student loans have not passed in Congress. Consequently, the president is circumventing the legislative process and violating the separation of powers.
State Republicans filed the lawsuit in a Missouri federal court arguing that Biden’s rescission plan does not adequately address how the pandemic has affected federal student loan borrowers, as required by a 2003 federal law that the administration cites as legal justification.
In a statement, Arkansas Attorney General claimed, “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. President Biden does not have the power to arbitrarily erase the college debt of adults who chose to take out those loans.”
Laws restrict the president from unilaterally forgiving loans taken out by students voluntarily, according to a lawsuit.
According to a Department of Education update on its website, borrowers cannot participate in the program unless they have already consolidated their loans by Thursday into the government’s direct loan program. These borrowers include people who hold federal loans through private banks and those under the Federal Family Education Loan Program and the Perkins Loan Program. The change affects the eligibility of an estimated 770,000 borrowers, reported AP News.
In a statement said, the department said, “Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve that goal while we continue to explore additional legally-available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans.”
A pause on federal student loan repayments – put on hold two years ago at the beginning of the pandemic – will be extended once more until the end of the year, the administration announced.
A number of conservative lawyers, Republican lawmakers, and business-oriented groups challenged the administration’s plans almost immediately. They claimed that Biden had overstepped his authority in taking such drastic measures without congressional consent.
A number of Democratic lawmakers who are facing tough re-election have also distanced themselves from the student loan plan. Many described it as a giveaway to the wealthy at the expense of the less well-off.
According to the Biden administration, it is now looking into the legality of certain parts of its debt cancellation plan. The plan originally stated it would cover borrowers whose federal student loans are held by private companies.
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