6 Republican states are suing the Biden administration over student-loan relief calling it 'economically unwise and downright unfair'
JIM WATSON/POOL/AFP via Getty Images
- Six Republican states are suing the Biden administration over student loan relief, the AP reported.
- The states are claiming that some of them will lose out on tax revenue from the relief.
- They also cite Biden calling the pandemic "over" since relief is hinged on an ongoing crisis.
Six Republican-led states are suing over President Joe Biden's plan to relieve $10,000 to $20,000 in student loan debt for some federal borrowers.
Arkansas, South Carolina, Iowa, Kansas, Nebraska, and Missouri filed the lawsuit jointly, with Arkansas Attorney General Leslie Rutledge leading the effort, according to the Associated Press's Seung Min Kim.
The suit claims that Biden's student loan relief, which cancels $10,000 in debt for borrowers making under $125,000 and $20,000 for borrowers under the same income cap who received Pell Grants, will negatively impact states' revenues, and is impairing Missouri's loan servicer, MOHELA, from giving out loans.
"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 complaint says. "No statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed."
The states cited that the president used the pandemic as legal justification for the ability to cancel debt, despite recently pronouncing the pandemic over — an announcement that could imperil student loan relief.
"Even Congress knew that the result of this policy would not ultimately benefit the country," Rutledge said in a Thursday press conference. "And that's why, again, the president resorted to the now-concluded Covid-19 pandemic."
The states will be seeking a preliminary injunction against relief, Rutledge confirmed in a press conference. If granted, that could potentially pause student loan relief.
In Nebraska, Iowa, Kansas, and South Carolina, student loan relief can't be taxed by the state — and Democrats ensured it would not be subject to federal taxes. As a result, those states will miss out on tax revenue from the relief, the suit claims.
"President Biden's unlawful political play puts the self-wrought college loan debt on the backs of millions of hardworking Americans, who are struggling to pay their utility bills and to make their mortgage payments," Rutledge said. "In the midst of this inflation, President Biden does not have the authority to arbitrarily erase college debt of adults who voluntarily chose to take out those loans."
The White House did not immediately respond to Insider's request for comment.
The spate of lawsuits come as the Department of Education sends out its first guidance to borrowers on how relief mechanisms will work, with applications set to open in October.
The complaint marks the second major lawsuit over student loan relief, which many Republicans have publicly decried. Pacific Legal Foundation, a conservative legal group, filed suit earlier this week. They claimed that plaintiff Frank Garrison, an attorney at the organization, would find himself on the other end of a tax bill over $1,000 because he was eligible for $20,000 in relief, and his home state of Indiana intends to tax relief.
Garrison is paying off his loans through the Public Service Loan Forgiveness (PSFL) program, where he should full, untaxed relief in about four years.
However, the Biden administration and Department of Education may have sidestepped that lawsuit after clarifying that borrowers who qualify for automatic relief can opt out. In a Wednesday filing, the Department of Justice reiterated that borrowers will be able to opt out — and said that the Department was already working to ensure that Garrison would not receive automatic relief, per his wishes.
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