Kansas Attorney General Derek Schmidt has filed a lawsuit in federal court challenging the Biden administration’s student loan cancellation program, saying that the administration lacks legal authority to make unilateral decisions to forgive debt without congressional authorization.
Schmidt said said he challenging the legality of what he called “election-year politics, adding that it “…makes hardworking families bear the cost of repaying student loans that were voluntarily undertaken by college graduates in families earning up to a quarter-million dollars per year.”
Schmidt joined officials from five other states, including Missouri and Arkansas, in seeking a temporary restraining order pausing the program. The administration has indicated it will start cancelling loan balances as early as next week.
A few months ago, the U.S. Supreme Court warned federal agencies against “asserting highly consequential power beyond what Congress could reasonably be understood to have granted” by statute. They attorneys general saying that the administration failed to achieve action on student loans through the legislative process, and is therefore resorting to using a federal law that applies in the context of military operations or national emergencies as its justification for taking this dramatic action.
The states argue the majority of the Mass Debt Cancellation will accrue to the debt borrowers in the top 60 percent of the income distribution, and is fundamentally unfair for those who can least afford it to provide through their tax dollars relief to the well-off who can afford to pay their own loans.
Schmidt said the law that the Biden administration relies on is known as the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act), passed to protect service members fighting in the War on Terror from student loan collections.
The states argue that the Mass Debt Cancellation is not remotely tailored to address the effects of the pandemic on federal student loan borrowers, as the Biden administration says is authorized by the HEROES Act. The cancellation instead disregards the act’s objectives and express requirements and distorts the act beyond recognition in the service of the administration’s political agenda on student loans. It is unlawful and arbitrary agency action, and it should be immediately set aside.
No borrower will be disadvantaged by an immediate court order delaying the loan cancellation program because loan repayments and interest accruals have been paused since March 2020.
A copy of the lawsuit is available at https://bit.ly/3BUwHaa.