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Georgia joins lawsuit to block Biden administration's student loan repayment plan

By FOX 5 Atlanta Digital Team
Published  April 12, 2024 7:39am EDT
Georgia
FOX 5 Atlanta

ATLANTA - Georgia is joining six other Republican-led states in suing to block the Biden administration over its new student loan repayment plan.

The lawsuit, filed earlier this week in federal court and led by Missouri, challenges Biden’s SAVE Plan, which has become a new legal target for conservative opponents after the Supreme Court toppled the Democratic president’s first attempt at student loan cancellation. It largely mirrors another suit filed last month by Republican attorneys general in 11 states, led by Kansas.

Filed just a day after Biden trumpeted a new proposal to cancel student loans for millions of borrowers, the lawsuit sets the stage for one legal battle and foreshadows another. The suit doesn’t directly challenge Biden’s newest plan for cancellation, but its architect, Missouri’s attorney general, separately threatened to bring action against that plan, too.

In a statement, Georgia Attorney General Chris Carr called the plan an illegal waste of tax dollars.

"Despite the Court having already settled this issue, the Biden administration continues to brazenly violate the law," said Carr. "Georgia taxpayers have made it clear that they know it’s wrong to be forced to pay off other people’s student loans, particularly those with the highest earning potential. This is election-year politics and an egregious example of federal overreach, and we’re fighting back yet again."

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A statement from the Education Department says Congress gave the agency power to define terms of certain repayment plans in 1993, and that authority has been used before.

"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," the department said.

The lawsuit reprises a courtroom showdown between the Biden administration and Missouri, which was a central figure in the Supreme Court case that overturned the Democratic president’s first try at loan cancellation last year.

President Joe Biden speaks while meeting with President Rodrigo Chaves Robles of Costa Rica in the Oval Office of the White House August 29, 2023 in Washington, DC. (Photo by Win McNamee/Getty Images)

In that case, the Supreme Court found that loan cancellation would harm Missouri because of its affiliation with a quasi-state loan servicing company, MOHELA, that stood to lose revenue generated by federal student loans.

The new lawsuit makes a similar argument. Biden’s new SAVE Plan speeds up an existing path to loan cancellation, which the suit says would deprive MOHELA — the Missouri Higher Education Loan Authority — of "up to 15 years in servicing fees."

Also joining the suit are Arkansas, Florida, North Dakota, Ohio and Oklahoma.

Another round of student loan forgiveness announced

The Biden administration announced that it is canceling student loans for nearly 80,000 Americans. The move comes as the president tries to gain momentum while campaigning for a second term.

The Biden administration launched the SAVE (Saving on a Valuable Education) Plan last year, calling it a "student loan safety net." It’s a modified version of other repayment plans that have been around for decades, but with more generous terms.

Congress created income-driven repayment plans in the 1990s to help borrowers who were struggling to make payments on student loans. Those plans capped payments based on a borrower’s income and promised to cancel any remaining debt after 20 or 25 years.

Biden’s SAVE Plan reduces monthly payments even further and forgives loans in as little as 10 years. The president announced the idea in 2022, but it was overshadowed by his call for widespread cancellation.

Almost 8 million Americans have enrolled in the plan, including 4.5 million low-income borrowers who have had their monthly payments reduced to $0.

The plan’s provisions are being phased in this year, with the faster path to cancellation originally scheduled to take effect in July. But the Biden administration accelerated that benefit and started canceling loans for some borrowers in February.

Separate from the repayment plan, Biden on Monday highlighted a new proposal that aims to reduce or cancel student loans for 30 million Americans. It would offer loan relief to five categories of borrowers, including those who have amassed large sums of accrued interest, those who have been paying loans for decades, and those who face financial hardship.

The Associated Press contributed to this report.