Republican-led states file new lawsuit to block Biden’s student loan forgiveness plans

Washington (CNN) — A group of seven Republican-led states filed a fresh lawsuit Tuesday, seeking to block new student loan forgiveness plans that the Biden administration expected to start rolling out this fall.

The lawsuit marks yet another legal challenge to President Joe Biden’s student loan policies and could potentially tie up his latest effort to deliver debt relief before the November election.

Currently, Biden’s student loan repayment plan known as SAVE (Saving on a Valuable Education) is blocked while litigation plays out at the 8th US Circuit Court of Appeals. And the president’s sweeping, one-time student loan forgiveness program was knocked down by the Supreme Court last year.

At issue in the latest lawsuit is a set of proposals that the Department of Education started drafting soon after the Supreme Court rejected the Biden administration’s program. The new plans are meant to deliver narrower student loan forgiveness that could withstand legal challenges.

One of the provisions would cancel accumulated interest for people with federal student loan balances bigger than what they originally borrowed. The full amount of interest would be canceled for borrowers whose annual income is $120,000 or less. Others could receive up to $20,000 in debt relief.

About 23 million people would benefit from the interest cancellation under the proposed rule, according to the Department of Education. In an email sent to borrowers in August, the department said it would start delivering this debt relief in the fall.

The cost of the interest cancellation is estimated to total $73 billion.

The set of student loan relief proposals have gone through a lengthy rulemaking process but have yet to be finalized.

The lawsuit claims that the plaintiffs have obtained documents showing the Department of Education intends to provide some of the student debt relief as early as this week – and that this would violate a statute prohibiting the education secretary from implementing a rule sooner than 60 days after its publication.

On Thursday, Judge J. Randal Hall, who is overseeing the case in the US District Court for the Southern District of Georgia, sided with the states and temporarily blocked the Department of Education from using the new rule to cancel student loan debt or interest for 14 days, though he could extend the order. The judge also set an initial hearing on the matter for September 18.

Hall wrote in his order that the states have a “substantial likelihood of success on the merits.”

“This is especially true in light of the recent rulings across the country striking down similar federal student loan forgiveness plans,” he wrote.

“We successfully halted their first two illegal student loan cancellation schemes; I have no doubt we will secure yet another win to block the third one,” Missouri Attorney General Andrew Bailey, who is leading the lawsuit, said in a statement on Tuesday.

The Department of Education declined to comment on pending litigation.

Even though Biden’s sweeping student loan forgiveness got knocked down by the Supreme Court, his administration has still canceled more student loan debt than under any other president – mostly by using existing programs. His administration has made it easier for certain groups of borrowers – such as public-sector workers, including teachers; disabled borrowers; and people who were defrauded by for-profit colleges – to qualify for student loan debt forgiveness.

So far, nearly 4.8 million people have seen their federal student debt canceled under Biden, totaling $169 billion.

This story has been updated with additional details.

CNN’s Devan Cole contributed to this report.

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