Republican-led states have sued President Joe Biden over his student loan repayment plan known as SAVE, arguing that he is overstepping his authority to cancel student debt. This plan was launched last year and offers lower monthly payments and a shorter pathway to loan forgiveness for low-income borrowers. The states claim that Biden is once again attempting to impose a controversial policy without the consent of Congress.
The legal challenges against the SAVE plan have been filed by 18 Republican-led states, with another group of 11 states filing a separate lawsuit. Many Republicans criticize Biden’s student loan policies as burdensome for taxpayers, transferring the cost of college degrees to those who did not attend college or who have already paid for their education. The Biden administration contends that they are fixing a broken system and providing relief to targeted groups of borrowers who already qualify for debt cancellation.
Since the launch of SAVE, nearly 8 million borrowers have enrolled and almost 153,000 people have had their remaining debt canceled, amounting to $1.2 billion in debt relief. The plan offers more generous terms, especially for low-income borrowers, with a forgiveness component after a certain number of years of payments. Unpaid interest does not accrue as long as full payments are made, benefiting borrowers by preventing their balance from increasing.
It is uncertain how the lawsuits against the SAVE plan will impact borrowers already enrolled, although for now, the plan remains available. The National Consumer Law Center suggests that there is no real risk to enrolling in SAVE and believes it is unlikely that canceled debt would be reinstated. Biden’s latest proposals for student loan forgiveness could include canceling accumulated interest for those in SAVE with balances exceeding their initial loan amounts.
Congress granted the Department of Education the authority to create repayment plans for federal student loans in 1993, but the legal challenges argue that the SAVE plan exceeds this power. Estimates of the plan’s cost over 10 years vary, with studies projecting between $138 billion to $475 billion. Before the cases can proceed to a ruling on their merits, the suing states must demonstrate legal injury to bring the lawsuits, as seen in previous challenges to Biden’s student loan forgiveness program.
In a similar lawsuit against Biden’s loan forgiveness program, the states were initially found to lack standing, but an appeals court reversed this decision and ultimately the Supreme Court ruled that Missouri had standing because of potential harm to a state-administered nonprofit. This decision did not address the standing of other states involved in the legal challenges. The legal battles over student loan repayment plans highlight ongoing disputes over the role of the federal government in addressing the student debt crisis and providing relief to borrowers.
