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WASHINGTON — Iowa and five other Republican-led states are suing the Biden administration in an effort to halt its plan to forgive student loan debt for tens of millions of Americans, accusing it of overstepping its executive powers.
It’s at least the second legal challenge this week to the sweeping proposal laid out by President Joe Biden in late August, when he said his administration would cancel up to $20,000 in education debt for huge numbers of borrowers. In Iowa, as many as 450,000 people could be affected by the news, according to Iowa College Aid, the state’s student financial aid agency.
The announcement, after months of internal deliberations and pressure from liberal activists, became immediate political fodder ahead of the November midterms while fueling arguments from conservatives about legality. The Biden administration sent an email to borrowers Thursday explaining how to prepare to apply for the program, which could begin as soon as next week.
In the lawsuit, being filed Thursday in a federal court in Missouri, the Republican states argue the plan is “not remotely tailored to address the effects of the pandemic on federal student loan borrowers,” as required by the 2003 federal law that the administration is using as legal justification. They point out that Biden, in an interview this month with CBS' "60 Minutes,” declared the COVID-19 pandemic over, yet still is using the ongoing health emergency to justify the wide-scale debt relief.
“It’s patently unfair to saddle hard-working Americans with the loan debt of those who chose to go to college,” Arkansas Attorney General Leslie Rutledge, who is leading the group, said in an interview.
In a statement, Iowa Gov. Kim Reynolds argued the wide-scale debt relief is fundamentally unfair to hard-working Americans to have their tax dollars used to forgive student loan debt of the “well-off who can afford to pay their own loans.”
“A significant majority of Americans have already paid off their student loans or chose not to pursue a higher education degree at all,” Reynolds said. “By forcing them to pay for other people’s loans — regardless of income — President Biden’s mass debt cancellation punishes these Americans and belittles the path they chose. This expensive, unlawful plan is an insult to working people and must be stopped.”
Iowa has a Democratic attorney general, but Reynolds, a Republican, signed on to the lawsuit on the state's behalf. Both Iowa Attorney General Tom Miller and Reynolds face re-election this year.
Miller, in a statement, said the governor has a statutory right to join such legal actions, and his office has a responsibility to assist.
“Had (Reynolds) not made this request, our office would not have joined this lawsuit in any way,” Miller said. “As a policy matter, I believe student loan forgiveness will provide much needed relief to thousands of Iowans who have felt the enormous crush of student debt.”
Kansas, Missouri, Nebraska and South Carolina also joined Arkansas in the lawsuit.
The suit argues that Missouri's loan servicer is facing a “number of ongoing financial harms” because of Biden's decision to cancel loans. Other states that joined the lawsuit argue that Biden's forgiveness plan will ultimately disrupt revenue to state coffers.
The administration has long said it was confident the forgiveness program would survive court challenges.
"Republican officials from these six states are standing with special interests, and fighting to stop relief for borrowers buried under mountains of debt," White House spokesman Abdullah Hasan said Thursday. "The president and his administration are lawfully giving working and middle class families breathing room as they recover from the pandemic and prepare to resume loan payments in January. "
Biden’s forgiveness program will cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, will get an additional $10,000 in debt forgiven.
The average federal and private student loan debt in Iowa was $29,900 in 2021, Iowa College Aid reported, citing FRBNY Consumer Credit Panel/Equifax data. That suggests the average Iowan with student loan debt would see some relief if long as their annual income qualifies.
The administration also said it would extend the current pause on federal student loan repayments — put on hold near the start of the pandemic more than two years ago — once more through the end of the year.
The administration faced threats of legal challenges to its plans almost immediately, with conservative attorneys, Republican lawmakers and business-oriented groups asserting that Biden was overstepping his authority without the assent of Congress.
Democratic lawmakers battling in tough re-election contests also distanced themselves from the student loan plan, as Republican officials called it an unfair government giveaway for relatively affluent.
In their lawsuit, the Republican attorneys general also contend that the forgiveness program violates the Administrative Procedures Act, which lays out how federal agencies should make regulations in order to ensure executive branch policies are well-reasoned and explained.
“The president does not have the authority to put himself in the place of Congress,” Rutledge said. “These actions must be taken by Congress and he can’t override that.”
To justify the plan’s legality, the Biden administration is relying on a post-Sept. 11, 2001, law meant to help members of the military that the Justice Department says allows Biden to reduce or erase student loan debt during a national emergency. But Republicans argue the administration is misinterpreting the law because, in part, the pandemic no longer qualifies as a national emergency.
Another lawsuit against Biden’s student loan program was filed this week in an Indiana federal court by the Pacific Legal Foundation, a libertarian legal advocacy group that employs a lawyer who says he would be harmed by the forgiveness plan. The lawyer, Frank Garrison, says erasing his current debt load will trigger a tax liability from the state of Indiana, which is among at least a half-dozen states where the forgiven loan
Republicans have also seized on the Biden plan’s price tag and its impact on the nation’s budget deficit. The Congressional Budget Office said this week that the program will cost about $400 billion over the next three decades. The White House countered that the CBO’s estimate of how much the plan will cost just in its first year, $21 billion, is lower than what the administration initially believed.
The Associated Press and Tom Barton of The Gazette Des Moines Bureau contributed.