A group of states led by Republicans is fighting the Biden administration to stop a new plan for paying off student loans that would help millions of people get their loans forgiven faster and with lower monthly payments.
Eleven states, led by Kansas, filed a federal case on Thursday saying that Biden went beyond what was allowed of him when he made the SAVE Plan. The plan was made available to borrowers last year and has already canceled more than 150,000 loans.
It says the new plan is the same as Biden’s first attempt to get rid of student loans, which the Supreme Court turned down last year. “The last time the defendants tried this, the Supreme Court said it was against the law.” The claim says, “Since then, nothing has changed.”
Biden announced the SAVE plan to pay off debt in 2022, along with a different plan to help more than 40 million Americans get rid of up to $20,000 in debt. After Republican states sued, the Supreme Court stopped the plan to cancel the plan. However, the court didn’t look at SAVE because it was still being worked out.
The new claim was brought one day after the White House held a “day of action” to support the SAVE Plan. The Biden administration says that more than 7.7 million borrowers have signed up for the plan. Of these, more than 5 million have had their monthly payments lowered to $100 or less because their yearly incomes are lower.
It was made in federal court in Topeka, Kansas, by Kris Kobach, who is the attorney general of Kansas. It asks a judge to stop the plan right away. Alabama, Alaska, Idaho, Iowa, Louisiana, Montana, Nebraska, South Carolina, Texas, and Utah all support the suit, along with Kansas.
“The president went ahead anyway in a very brazen way,” Kobach said at a news conference at the Kansas Statehouse. It’s against the law for President Biden to do what he wants to do.
The Education Department has had income-based payback plans since the 1990s, and Biden’s new plan is similar to them but with some changes. The first ones were made by Congress to help people who were having trouble making their payments. They limited payments to a certain amount of their income and forgiven any leftover debt after 20 or 25 years.
The new plan has better terms than the old one. It will lower monthly payments for more people and forgive loans in as little as 10 years. It’s different from other plans because as long as borrowers make their regular payments, interest doesn’t build up.
Parts of the plan are being put into place over this year, and the faster way to stop was supposed to start later this summer. But the Biden government sped up that benefit and in February began canceling some borrowers’ loans.
Biden explained that the goal was “to give more borrowers breathing room so they can get out from under the burden of student loan debt.”
Instead of starting from scratch with a new plan, the Education Department changed plans that were already in place by following federal rules. Supporters saw it as a legal move that gave the plan more support because they thought Republicans would fight it.
Kobach says in the new case, though, that Biden should have gone through Congress to make such big changes.
The states say that Biden’s plan is bad for them in many ways.
The states say that if the payback plan is so easy, fewer people will want to work for the government and use the Public Service Loan Forgiveness program. They think that more state workers will quit, which will make it harder for public schools to hire and keep teachers.
They say the plan will help the U.S. economy by giving hundreds of billions of dollars in loan relief, which would mean states would have to do more to stop scams. The suit says that the plan “will create enormous opportunities for fraudsters to take advantage of student loan borrowers that would not otherwise exist.“