GOP-led States Sue Education Dept. To Block Biden's Student Loan Forgiveness Program

Seven states led by Republicans have sued the Department of Education to prevent President Joe Biden from carrying out its student-loan forgiveness plan, citing the move to be "illegal."

CNBC reported that the seven states include Alabama, Arkansas, Florida, Georgia, Missouri, North Dakota and Ohio.

The lawsuit, which was filed at the 8th US Circuit Court of Appeals, noted that a previous similar effort by the present administration was also blocked by the courts.

The suit also accused the Biden administration of canceling "hundreds of billions of dollars of loans," stating that it was unlawful. The states noted that there should be an approval from Congress.

The states also alleged that the loan servicers of the Education Department were already instructed to cancel eligible loans as early as Sept. 3, saying that the act was violative of timing restrictions and violates the rulemaking process.

When sought for comment, the Education Department spokesperson declined to comment on the matter, which is already in courts. However, the department reiterated its stand on fighting for borrowers who are still struggling to repay their student loans.

There is debate over the exact costs of the new debt relief plan, but one estimate puts it at around $147 billion, rather than the hundreds of billions of dollars alleged by the states.

The lawsuit against the Education Department is not the first attempt at preventing the Biden administration from forgiving student loans. Based on the opinion of experts, as reported by CNBC, there is a possibility that Biden will deliver the relief to tens of millions of Americans a few weeks before the election.

In June 2023, the Supreme Court blocked the first policy on student loan forgiveness, prompting the Biden administration to overhaul the plan.

Currently under litigation is the Biden administration's SAVE (Saving on a Valuable Education) program, a new repayment plan that is more beneficial to borrowers. However, it still is on hold due to a number of issues on legality. SAVE offers lower monthly payments for students and those with small balances can look forward to quicker debt forgiveness.

One of the borrower-friendly provisions of SAVE is that it would cancel accumulated interest for those whose federal student loan balances are bigger than the original borrowed amount, CNN reported.

The full amount of interest would be canceled for those who earn $120,000 or less a year, while others can enjoy up to $20,000 relief in debt. More than 20 million people would benefit from the interest cancellation under the proposed rule, according to the Department of Education.