6 States Sue Biden, Education Secretary Over Student Debt Cancellation

Arkansas Attorney General Leslie Rutledge speaks during a press conference at the Department of Justice in Washington on Feb. 27, 2018. (Toya Sarno Jordan/Getty Images)

Six states filed a lawsuit against President Joe Biden and Education Secretary Miguel Cardona on Sept. 29, stating that their bid to cancel significant amounts of student loan debt for millions of Americans is illegal.

"It is the epitome of unlawful and arbitrary agency action, and it should be set aside," officials for Nebraska and five other states said in the lawsuit, which was filed in federal court in Missouri.

The officials are challenging a Biden administration plan that would cancel up to $20,000 in federally held student debt for individuals making less than $125,000 per year or married couples who earn less than $250,000 per year. Administration officials estimate that more than 40 million Americans are eligible.

The problem is that the justification for the move doesn't hold, according to the new suit.

The Department of Education claims that the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) gives it the authority to cancel so much debt for so many people because of the COVID-19 pandemic. The law enables the education secretary to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs ... in connection with a war or other military operation or national emergency.”

The administration cited the COVID-19 pandemic as a national emergency.

But even the Department of Justice's legal opinion (pdf) ostensibly in support of the move concluded that any cancellation must be “structured to put loan recipients back into the financial position they would be in were it not for the national emergency” and limited only to the harm that has a relation to the borrower’s federal loans, “no matter how much [total] financial harm a borrower may have suffered because of a national emergency," according to the suit.

"The Biden Administration’s Mass Debt Cancellation does not even attempt to meet these requirements. It instead justifies relief for all borrowers whose debt the Administration holds based on talismanic reference to the COVID-19 pandemic. It makes no difference to the Administration’s cancellation whether the pandemic rendered a borrower better or worse off or how much financial harm the borrower suffered in relation to her loans," the suit reads.

"Thus, the Mass Debt Cancellation is not remotely tailored to address the effects of the pandemic on federal student loan borrowers, as required by the HEROES Act."

The plaintiffs are asking the court to declare the debt relief in violation of federal law and block it from taking effect.

Administration officials have said that the first student debtholders will see relief in October.

The White House and the Department of Justice didn't respond to requests for comment.

Attorneys General

Arkansas Attorney General Leslie Rutledge, Nebraska Attorney General Douglas Peterson, Missouri Attorney General Eric Schmitt, Kansas Attorney General Derek Schmidt, South Carolina Attorney General Alan Wilson, and Iowa Solicitor General Jeffrey Thompson filed the suit.

“The Biden Administration’s executive action to cancel student loan debt was not only unconstitutional, it will unfairly burden working-class families and those who chose not to take out loans or have paid them off with even more economic woes,” Schmitt, a Republican, said in a statement. “The Biden Administration’s unlawful edict will only worsen inflation at a time when many Americans are struggling to get by."

Rutledge, another Republican, said, “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 home loans in the midst of Biden’s inflation. President Biden does not have the power to arbitrarily erase the college debt of adults who chose to take out those loans.”

The suit is at least the third to challenge the Biden administration's cancellation plan.

White House press secretary Karine Jean-Pierre, responding earlier in the week to one of the suits, said that the program "is going to help millions of people" and "folks have an option to opt-out."