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Red states sue to block Biden student loan relief program

The lawsuit claims the president does not have the power to implement the plan through executive action and that it would worsen inflation without providing relief to the poor.

ST. LOUIS (CN) — President Joe Biden’s plan to issue student loan relief to millions of Americans is “unfair and unwise,” according to a lawsuit filed Thursday by the attorneys general of six Republican-led states.

The lawsuit, spearheaded by Missouri Attorney General Eric Schmitt and filed in St. Louis federal court, seeks to prohibit the forgiveness plan unveiled by Biden in August.

“In addition to being economically unwise and downright unfair, the Biden Administration’s Mass Debt Cancellation is yet another example in a long line of unlawful regulatory actions,” the lawsuit states. “No statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed.”

Biden’s plan would grant between $10,000 and $20,000 of student loan relief to qualified borrowers.

The U.S. Department of Education did not immediately respond to a request for comment on the lawsuit.

Schmitt, who is also the Republican nominee for an open U.S. Senate seat in November’s election, said in a statement that the student loan forgiveness plan would "worsen inflation at a time when many Americans are struggling to get by."

“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,” he said.

The lawsuit argues the plan will hurt an already struggling economy and will provide no relief to the working class and the poor.

“The majority of the Mass Debt Cancellation will ‘accrue to the debt borrowers in the top 60 percent of the income distribution.’ And none of the benefit will accrue to those who worked and paid their debt,” the lawsuit states.

The complaint cites a study completed by the Wharton School of the University of Pennsylvania that concluded the loan forgiveness alone will cost up to $519 billion over 10 years, and the overall cost could rise to more than $1 trillion when factoring in the other components of the plan.

The lawsuit states that Biden does not have the authority to issue an executive action to implement the plan, claiming the administration is wrongly basing the decision on the HEROES Act, which when originally passed in 2003 provided economic relief for education costs to military members who responded to national emergencies such as 9/11.

More recently, the HEROES Act was implemented in 2020 to provide similar relief to those affected by the Covid-19 pandemic.

The red states suing to block the plan claim it "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," the lawsuit states. "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. 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.”

The complaint also notes that the U.S. Supreme Court, in its June decision in West Virginia v. EPA, warned federal agencies against "asserting highly consequential power beyond what Congress could reasonably be understood to have granted" by statute.

"Yet the Administration’s Mass Debt Cancellation does precisely that," the lawsuit states.

Arkansas, Iowa, Kansas, Nebraska, and South Carolina joined Missouri in the lawsuit.

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