“It is the epitome of unlawful and arbitrary agency action, and it should be set aside,” officials with Nebraska and five other states said in the lawsuit, filed in federal court in Missouri.
The officials are challenging a Biden administration plan that would cancel up to $20,000 in federally-held student debt for individuals making less than $125,000 a year, or married couples who earn less than $250,000 a year. Administration officials estimate over 40 million Americans are eligible.
The problem, according to the new suit, is that the justification for the move doesn’t hold.
The Department of Education asserted that the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) as giving the authority to cancel so much debt for so many people due to the COVID-19 pandemic. The law enables the education secretary to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs … in connection with a war or other military operation or national emergency.” The administration cited the COVID-19 pandemic as the national emergency.
But even the Department of Justice’s legal opinion (pdf) ostensibly in support of the move concluded that any cancellation must be “structured to put loan recipients back into the financial position they would be in were it not for the national emergency” and limited only to the harm that has a relation to the borrower’s federal loans, “no matter how much [total] financial harm a borrower may have suffered because of a national emergency,” the suit notes.
“The Biden Administration’s Mass Debt Cancellation does not even attempt to meet these requirements. It instead justifies relief for all borrowers whose debt the Administration holds based on talismanic reference to the COVID-19 pandemic. It makes no difference to the Administration’s cancellation whether the pandemic rendered a borrower better or worse off or how much financial harm the borrower suffered in relation to her loans,” the suit states.
“Thus, the Mass Debt Cancellation is not remotely tailored to address the effects of the pandemic on federal student loan borrowers, as required by the HEROES Act.”
Plaintiffs are asking the court to declare the debt relief in violation of federal law and to block it from taking effect.
Administration officials have said the first student debtholders will see relief in October.
The White House and the Department of Justice did not respond to requests for comment.
Arkansas Attorney General Leslie Rutledge, Nebraska Attorney General Douglas Peterson, Missouri Attorney General Eric Schmitt, Kansas Attorney General Derek Schmidt, South Carolina Attorney General Alan Wilson, and Iowa Solicitor General Jeffrey Thompson filed the suit.
“The Biden Administration’s executive action to cancel student loan debt was not only unconstitutional, it will unfairly burden working class families and those who chose not to take out loans or have paid them off with even more economic woes,” Schmitt, a Republican, said in a statement. “The Biden Administration’s unlawful edict will only worsen inflation at a time when many Americans are struggling to get by.”
“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,” added Rutledge, another Republican. “President Biden does not have the power to arbitrarily erase the college debt of adults who chose to take out those loans.”
The suit is at least the third to challenge the Biden administration’s cancellation plan.
White House press secretary Karine Jean-Pierre, responding earlier in the week to one of the suits, said that the program “is going to help millions of people” and “folks have an option to opt out.”