President Joe Biden’s second attempt to offer broader student loan forgiveness has encountered its first legal challenge. On Tuesday, seven Republican state attorneys general filed a lawsuit in Georgia’s Southern District, aiming to block Biden’s latest debt relief plan, which uses the Higher Education Act of 1965.
The lawsuit challenges a plan announced by the Education Department last summer, which came after the Supreme Court rejected Biden’s initial effort to cancel student debt. This new plan could benefit over 30 million borrowers by canceling some or all of their student debt, particularly for those who have unpaid interest, have been repaying loans for at least 20 years, or attended schools that left them with excessive debt compared to their post-graduation earnings.
The final rule for this relief has not yet been published, but the Education Department had planned to start implementing it in October. The lawsuit, however, claims that the department began working on the plan’s implementation before the final rule was published. The states are asking the court to stop the relief until a legal decision is made.
The lawsuit describes this attempt as the Secretary of Education’s most aggressive but also “weakest” effort to cancel student loans, following two previous failures.
The states also allege that the Education Department intended to start enacting the relief as early as September. They argue that the department was not following proper procedures by planning to provide relief to borrowers before the final rule was in place.
Additionally, the states claim that the relief plan would financially harm MOHELA, a student loan company based in Missouri, by reducing revenue and increasing administrative costs.
The Education Department has not yet responded to these allegations, and it remains unclear how this will affect its broader relief plans. Meanwhile, Biden’s new income-driven repayment plan, SAVE, is also blocked in court, leaving over 8 million borrowers awaiting a final decision.