Republican-led states file lawsuit to block Biden’s massive new student loan bailout plan

Eleven Republican-led states have filed a lawsuit against President Biden and Education Secretary Miguel Cardona in an attempt to block the administration’s latest student loan debt cancellation plan.

The lawsuit, filed Thursday in Kansas federal court by the state’s Attorney General Kris Kobach, is also backed by attorneys general in Alabama, Alaska, Idaho, Iowa, Louisiana, Montana, Nebraska, South Carolina, Texas and Utah.

They argue Biden overstepped his authority in creating the Saving on a Valuable Education (SAVE) Plan – an income-driven repayment plan for student loans that could cost taxpayers as much as $475 billion over 10 years.

Biden’s latest student loan bailout plan could cost taxpayers $475 billion. REUTERS

The complaint claims that the SAVE Plan, set to go into effect July 1, is “every bit as improper as [Biden’s] first unlawful attempt at debt forgiveness” under the HEROES Act, in which the president sought to forgive up to $20,000 in federal student loans for about 40 million people.

Biden’s initial $400 billion debt forgiveness plan was struck down by the Supreme Court last summer.

“Last time Defendants tried this the Supreme Court said that this action was illegal,” the lawsuit states. “Nothing since then has changed, other than introducing more legal errors into this Rule’s underlying analysis.”

Under the SAVE Plan, monthly income-based student loan payments would be cut in half, while monthly payments for minimum-wage earners would be eliminated. For student borrowers who owe $12,000 or less, all outstanding debt would be forgiven after 10 years.

Most community college students would not have to pay back any debt under the plan, according to the Biden administration.

The red state attorneys general argue that the Biden administration’s $156 billion cost estimate for the SAVE Plan is “a floor.”

The Congressional Budget Office estimates it will cost taxpayers $230 billion over 10 years, while the Penn Wharton Budget Model expects it to cost as much $475 billion over a decade.

Kobach argues that “not since the Civil War” has a president attempted to defy the Supreme Court in the manner Biden is. AP

“The law simply does not allow President Biden to do what he wants to do,” Kobach told reporters at the Kansas Statehouse Thursday, calling it “brazen” that Biden moved forward with another student loan bailout plan just weeks after the Supreme Court’s June 2023 ruling.

“Not since the Civil War era has there been a sitting president attempting to defy the Supreme Court in this manner,” he added.

The White House did not respond to The Post’s request for comment.

A Department of Education spokesperson declined to comment on the pending litigation but insisted “Congress gave the U.S. Department of Education the authority to define the terms of income-driven repayment plans in 1993, and the SAVE plan is the fourth time the Department has used that authority.”
“From day one, the Biden-Harris Administration has been fighting to fix a broken student loan system, and part of that is creating the most affordable student loan repayment plan ever that is lowering monthly payments, protecting millions of borrowers from runaway interest, and getting borrowers closer to debt forgiveness faster,” the spokesperson added.

“The Biden-Harris Administration won’t stop fighting to provide support and relief to borrowers across the country – no matter how many times Republican elected officials try to stop us.”