“Attorney generals for 17 Republican-led states have sued the Biden administration over its latest student loan debt forgiveness plan, arguing it does not have the authority to wipe out student loan debt for an estimated 30 million Americans,” reports The College Fix. The plan would forgive debts for various borrowers who have failed to pay off their loans over a ten-year period.
“Yet again, the President is unilaterally trying to impose an extraordinarily expensive and controversial policy that he could not get through Congress,” according to the complaint filed in one of the lawsuits against the plan, filed in the U.S. District Court for the Eastern District of Missouri by seven states (Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma).
“President Biden does not have the authority to erase student debt without express congressional approval,” says Missouri Attorney General Andrew Bailey’s office. “AG Bailey swore an oath to uphold our Constitution, so he filed suit to do exactly that in this instance. Every American, including Missouri taxpayers, benefit from that.”
The College Fix adds:
The second lawsuit, filed by Kansas, Alabama, Alaska, Idaho, Iowa, Louisiana, Montana, Nebraska, South Carolina and Texas, argues that the last time the Biden administration wiped out student loan debt administratively, the Supreme Court ruled it was unlawful.
“Nothing since then has changed,” the lawsuit argues.
“Biden openly boasted about his defiance of the Supreme Court with this move, stating in Jacksonian fashion: ‘the Supreme Court blocked it. They blocked it. But that didn’t stop me,’” the lawsuit states. “This lawsuit is now necessary to prevent Defendants from continuing to flout the law, which includes ignoring Supreme Court decisions.”…
The new plan’s cost is unknown.
“The White House hasn’t put forward an estimate for how much the new plan would cost the federal government. Biden’s earlier program would have forgiven roughly $430 billion in student loan debt,” The Wall Street Journal reported April 8.
Student loan bailouts were a key 2020 election promise from Biden, but the Supreme Court in June 2023 struck down Biden’s initial attempt in Biden v. Nebraska, ruling the HEROES Act does not grant him the authority to cancel $430 billion-plus of student loan principal.
But soon after the decision was handed down, Biden announced the new student debt loan forgiveness plan.
According to the Biden administration, the plan is aimed at providing relief to various types of borrowers, such as former students at higher education programs deemed to be of “low-financial-value,” including college dropouts. Unless judges issue an injunction against the plan, debt cancellation will take effect on July 1, according to the complaints filed in the lawsuits against it.
“Despite the Court having already settled this issue, the Biden administration continues to brazenly violate the law. This is election-year politics and an egregious example of federal overreach, and we’re fighting back yet again,” Georgia Attorney General Chris Carr says.
Florida Attorney General Ashley Moody stated in a press release that it “will fight in court to make sure that hard-working Americans, who are struggling to buy groceries thanks to Biden, are not on the hook for other people’s debt.”
In an editorial two weeks ago, The Wall Street Journal criticized the plan, arguing it “will encourage colleges to raise costs, especially in graduate programs for which there are no federal loan limits. Who cares if students can’t repay? They will be forgiven one way or another.”
The Supreme Court’s 2023 ruling against Biden’s earlier loan-forgiveness plan was expected by most observers. Some of them accused Biden of currying favor with young voters by promising student loan forgiveness that he knew was illegal and would be struck down, thus giving them false hope. Biden sought to deny this, saying “I didn’t give any false hope. The Republicans snatched away the hope that they were given.”
But that was dishonest on Biden’s part. Earlier, he himself had admitted he lacked the power to forgive student loans en masse. The president said of student loan cancellation during a 2021 CNN town hall, “I don’t think I have the authority to do it by signing with a pen.”
Other Democratic Party leaders used to admit that Biden lacks the power to forgive student loans, the very ones denouncing today’s Supreme Court decision. On July 28, 2021, “then-Speaker of the House Nancy Pelosi explained: ‘People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”
As journalist Charles Cooke noted in 2023, “Biden knew this was illegal. Everyone knew this was illegal. That he tried to do it anyway, in violation of his oath of office, remains a monumental disgrace.”
Canceling student loan debt is “regressive and unfair,” says Katherine Abraham, a former adviser to Obama who served as Commissioner of the Bureau of Labor Statistics during the Clinton administration. As Greg Price points out, “Only 37% of Americans have a 4-yr college degree, only 13% have graduate degrees, and a full 56% of student loan debt is held by people who went to grad school. Biden’s plan to cancel it would be like taking money from a plumber to pay the debt of a lawyer.” Even the liberal Washington Post called Biden’s student-loan bailout “a regressive, expensive mistake.”
Student loan forgiveness also is inflationary. Jason Furman, chairman of President Obama’s Council of Economic Advisers, who called Biden’s plan “reckless.” Furman says “Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.” Biden’s student loan forgiveness will increase inflation, inequality, tuition, and the national debt.
Writing off student loans will encourage colleges to jack up tuition, by making it more attractive to take out big loans to cover college tuition. When students are willing to borrow more to go to college, colleges respond by raising tuition. The Daily Caller notes that “each additional dollar in government financial aid translated to a tuition hike of about 65 cents,” according to the Federal Reserve Bank of New York.
