Utah joins lawsuit to block Biden’s student debt forgiveness plan

Utah Attorney General Sean Reyes in February, 2022. Photo: Sean Reyes

Attorney General Sean Reyes said the program was a ‘purely political election-year maneuver’

By: Alixel Cabrera, Utah News Dispatch

Utah joined other 10 red states in a lawsuit against President Joe Biden and Secretary of Education Miguel Cardona to block a second effort to cancel student debt.

The Biden administration approved nearly $138 billion in student debt cancellation for almost 3.9 million borrowers through the SAVE plan, which has a calculated budget of $156 billion. Borrowers who have been in repayment after 10 years and received $12,000 or less on student loans qualify for the relief.

In the complaint led by Kansas, the attorneys general recalled a 2022 federal initiative to forgive approximately $430 billion in student loans in what they described as “a strained interpretation of the HEROES Act,” a 2003 law that allows rule waivers or modifications to students’ financial assistance programs. But, the Supreme Court shut off that initiative.

“Nothing since then has changed, other than introducing more legal errors into this Rule’s underlying analysis,” the lawsuit reads. However, the new debt relief plan comes from the SAVE plan, a newer rule, and not the HEROES Act.

The states argue that the cost estimate in the SAVE plan is off, the suit says, as it initially considered the $430 billion HEROES Act funding in its calculations, but it was never updated to reflect the rejection of that funding. As a result, the challenge says, the actual cost of the program is much higher.

Utah Attorney General Sean Reyes described the student loan forgiveness plan as a “purely political election-year maneuver.”

“The White House blithely ignores precedent and acts like this version is somehow different and less offensive,” he said in a news release. “In fact, the current proposal is even more problematic because it relies on numbers and calculations from its first failed attempt that are invalid and unsustainable.”

The lawsuit states that the rule would cause financial harm for the states that filed the suit, including Kansas, Alabama, Idaho, Iowa, Louisiana, Montana, Nebraska and Utah, through loss of state tax revenue, as it would decrease the amount of outstanding student loan debt.

In addition to that, the legal challenge says, the forgiveness plan harms the states’ ability to recruit and retain talent, including legal staff in state attorney general offices, as “state agencies typically cannot pay as much to recruit and retain talent as private sector employers,” and they rely on the availability of student debt forgiveness plans to recruit personnel.

The U.S. Department of Education didn’t comment on the lawsuit because it is pending litigation. But, a spokesperson said the SAVE plan is the fourth time the department has used an authority granted by Congress to define the terms of income-driven repayment plans.

“From day one, the Biden-Harris Administration has been fighting to fix a broken student loan system, and part of that is creating the most affordable student loan repayment plan ever that is lowering monthly payments, protecting millions of borrowers from runaway interest and getting borrowers closer to debt forgiveness faster,” the spokesperson said. “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.”

Kansas Attorney General Kris Kobach said that “not since the Civil War era has there been a sitting president attempting to defy the Supreme Court in this manner,” according to the Kansas Reflector.

“He is forcing people who did not go to college, or who worked their way through college, to pay for the loans of those who ran up exorbitant student debt,” Kobach said. “This coalition of Republican attorneys general will stand in the gap and stop Biden.”