A federal judge in the state of Kansas ruled on Friday that only 3 of the 11 states that filed a lawsuit against President Joe Biden’s recent $156 billion student loan debt forgiveness plan could pursue their case. By the end of March, 11 Republican-led states filed a lawsuit against the Biden administration’s student loan debt forgiveness plan, stemming from the rejection last year of the president’s $430 billion student debt elimination initiative by the U.S. Supreme Court.
Alabama, Alaska, Idaho, Iowa, Kansas, Louisiana, Montana, Nebraska, South Carolina, Texas, and Utah made the request for a refund, for the loan forgiveness of the Biden Valuable Education Savings Plan (SAVE), in the lawsuit, the 11 states asked the United States District Court for the District of Kansas to officially declare the SAVE plan illegal and block its progress.
All 11 states fully or partially backed former Republican President Donald Trump in the 2020 presidential election; one of the three electoral districts in the state of Nebraska supported Biden, a Democrat.
Judge Clears Path for Partial Implementation of Biden’s Loan Forgiveness Plan
On Friday, U.S. District Judge Daniel Crabtree, nominated by former President Barack Obama in Wichita, determined that South Carolina, Texas and Alaska alleged “barely” enough facts to have a legal position to pursue their case to confront the Biden administration’s plan, in court.
According to the court documents, Crabtree expressed that the three states had established a legal situation that was based on how the plan would likely decrease their revenue for public instruments that provides help with education financing and student loans.
However, Crabtree denied the other eight states led by Kansas Attorney General Kris Kobach for lack of direct harm, as the states argued that the plan would reduce their income tax revenues or hurt their ability to do state employee hiring.
“No court has ever accepted this theory, and this court refuses to be the first,” Crabtree said in a written statement. “These plaintiffs simply have nothing to do with gambling.”
According to Reuters, a spokesman for Kobach, whose office was leading Friday’s case, said his office was “reviewing the judge’s decision and consulting with the other states in our coalition.”
Student Loan Forgiveness Application For Biden’s New Plan
The ruling comes after experts previously commented that it would be difficult for each state to have legal capacity to proceed with its case.
“The odds of success for the states in this lawsuit are much lower than in the one-time forgiveness case”” attorney and Student Loan Sherpa founder Michael Lux previously said.
Lux commented, that the states are probably going to have a hard time establishing a legal situation, especially in regards to Biden’s new SAVE payment plan.
”The legal authority of the Department of Education to create the SAVE plan is much stronger than the argument in favor of the one-time forgiveness,” Lux said. “In the case of the one-time pardon, the government argued that they were authorized to do so, although disaster legislation was passed after September 11th”
In this case, the government can argue that Congress explicitly authorized the creation of income-based payment plans and that “I left it up to the Department of Education to determine exactly how the program worked.”
Under the SAVE plan, 8 million people are eligible for lower payments or potentially full debt forgiveness.The repayment plan calculates payments on a monthly basis, from the loan based on income and family size, as well as discretionary income, reducing the amount owed by millions.
About half of eligible borrowers saw their monthly payments go to zero if they earned less than $16 an hour.
Who Qualifies For Biden’s Student Debt Relief Plan
The recent student loan forgiveness plan proposed by the Biden administration has been the subject of multiple rounds of negotiated rulemaking, a process in which non-federal stakeholders come together to reach consensus on the regulatory text that will govern such a program. During these rulemaking sessions, which took place over the past six months, both advocates and the Department of Education largely agreed on the need to automate student loan forgiveness whenever possible.
Of the five categories of borrowers who could qualify for student loan forgiveness under Biden’s new plan, several may not require applications. This bill could simplify the program and expedite debt relief for millions of people by eliminating the need for officials to manually review individualized requests for relief.
Some Student Loan Borrowers With Automatic Qualification
One of the groups benefited by this automation is composed of those borrowers who are eligible for loan forgiveness under existing programs, but who have not yet submitted their application or enrolled. The plan would “automatically cancel the debt of borrowers who would otherwise be eligible for loan forgiveness under income-based repayment (IDR) plans, such as the SAVE Plan or public service loan forgiveness, but who are not enrolled in those programs,” according to the department’s new guidance.
Biden’s plan also contemplates the cancellation of student debt for those borrowers who initiated repayment many years ago. College borrowers would be eligible for student loan forgiveness if they first initiated repayment at least 20 years ago, while borrowers with graduate school debt could get loan forgiveness if they first initiated repayment at least 25 years ago. The Department of Education already has the necessary data to make these determinations, so an application may not be required.
