Several Republican-led states, spearheaded by Missouri, have initiated lawsuits to challenge President Biden's new student loan repayment plan, known as the SAVE Plan. This plan offers a faster route to loan cancellation and has already resulted in the forgiveness of loans for more than 150,000 borrowers.
The lawsuit, filed in federal court, alleges that President Biden is attempting to implement an expensive and controversial policy unilaterally, bypassing Congress. It mirrors a similar lawsuit filed by Republican attorneys general from 11 states last month, led by Kansas.
Missouri's attorney general, the architect behind the lawsuit, has indicated a willingness to challenge President Biden's newest proposal for loan cancellation as well.
The Biden administration has defended the SAVE Plan, stating that Congress granted the Education Department authority to define the terms of certain repayment plans in 1993. They assert that this authority has been exercised before and that the administration will continue to fight for support and relief for borrowers despite legal challenges.
This lawsuit reopens a legal battle between the Biden administration and Missouri, reminiscent of a previous Supreme Court case that overturned the president's first attempt at loan cancellation. The lawsuit argues that the SAVE Plan would harm Missouri's quasi-state loan servicing company, MOHELA, by depriving it of servicing fees.
Other states joining Missouri in the lawsuit include Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma.
The SAVE Plan, launched last year, offers a modified version of existing income-driven repayment plans with more generous terms, including reduced monthly payments and loan forgiveness in as little as 10 years.
The lawsuit alleges that the plan undermines the Public Service Loan Forgiveness program and makes it harder for states to hire and retain employees. It also criticizes the plan for allowing more than half of borrowers to pay nothing, characterizing it as a grant program not authorized by Congress.
President Biden's new proposal to reduce or cancel student loans for 30 million Americans was also criticized by Missouri's attorney general, who labeled it an illegal attempt to bypass Congress and threatened further legal action.
