A significant development unfolded on Friday as a federal judge in Kansas ruled that only three out of the 11 states that filed a lawsuit against President Joe Biden’s recent $156 billion student loan debt forgiveness plan could continue with their case.
In late March, 11 Republican-led states initiated legal action against the Biden administration’s student loan debt forgiveness plan. This move came in response to last year’s rejection of the president’s $430 billion student debt erasure initiative by the U.S. Supreme Court.
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These states sought reimbursement student loan
These states sought reimbursement for Biden’s Saving on a Valuable Education Plan (SAVE) loan forgiveness. In their lawsuit, they requested that the U.S. District Court for the District of Kansas declare the SAVE plan illegal and prevent its implementation.
The states involved in the lawsuit include:
- Alabama
- Alaska
- Idaho
- Iowa
- Kansas
- Louisiana
- Montana
- Nebraska
- South Carolina
- Texas
- Utah
It’s noteworthy that all 11 states either fully or partially supported former Republican President Donald Trump in the 2020 presidential election. Interestingly, one of Nebraska’s three congressional districts supported Biden, a Democrat, highlighting a unique political dynamic within the group of states challenging the plan.
As the legal battle progresses, the outcome of this case could have significant implications for the future of student loan debt forgiveness in the United States, affecting millions of borrowers nationwide.
Judge Crabtree’s Ruling
On Friday, U.S. District Judge Daniel Crabtree, who was appointed by former President Barack Obama in Wichita, made a noteworthy decision. He ruled that only three of the eleven states that filed a lawsuit against Biden’s student loan debt relief plan had provided sufficient grounds to proceed with their case.
States with Legal Standing
According to the court documents, Judge Crabtree determined that South Carolina, Texas, and Alaska had “just barely” alleged enough facts to establish legal standing. The ruling was based on the potential impact of the plan on their revenue streams, specifically concerning public instrumentalities that support education funding and student loans.
Rejected Claims
However, the judge rejected the claims from eight other states, led by Kansas Attorney General Kris Kobach. These states argued that the plan would reduce their income tax revenues or negatively affect their ability to recruit state employees. Judge Crabtree dismissed their arguments due to a lack of direct harm.
Key Points from the Ruling
- Three states – South Carolina, Texas, and Alaska – can proceed with their lawsuit.
- The ruling was based on the potential reduction in revenue for public entities involved in education funding.
- Eight other states were dismissed from the case due to insufficient evidence of direct harm.
This ruling marks a significant step in the legal challenges against the Biden administration’s student loan debt relief plan. As the case progresses, it will be crucial to monitor how these states present their arguments and the potential implications for student loan borrowers across the country.
In a decisive move, Judge Crabtree declared, “No court has ever bought into this theory, and this court declines to become the first. These plaintiffs simply have no skin in the game.”
Judge Crabtree’s Ruling
According to Reuters, a spokesperson for Kobach, whose office was at the forefront of Friday’s case, stated that his office is “reviewing the judge’s decision and consulting with the other states in our coalition.”
Newsweek has reached out to both Kobach’s office and the White House for comments, but no responses have been received yet.
Legal Standing Challenges
This ruling echoes the sentiments of experts who had previously informed Newsweek that it would be challenging for each state to establish legal standing in this case.
- Michael Lux, an attorney and founder of Student Loan Sherpa, emphasized the difficulties states would face.
- “The odds of success for the states in this lawsuit are much lower than the one-time forgiveness case,” Lux explained.
- He noted that states would likely struggle to establish legal standing, particularly concerning Biden’s new SAVE repayment plan.
As the legal landscape continues to evolve, the challenges of establishing standing in such cases remain a critical hurdle for states aiming to contest federal policies.
The legal landscape surrounding student loan forgiveness has been a topic of much debate and speculation. However, when it comes to the SAVE plan, the Department of Education’s authority is on significantly firmer ground.
The Robust Legal Foundation of the SAVE Plan
According to Lux, “The legal authority for the Department of Education to create the SAVE plan is much stronger than the argument for one-time forgiveness.” In the case of one-time forgiveness, the government based its argument on disaster legislation passed in the aftermath of 9/11. Conversely, the SAVE plan benefits from a more explicit legal foundation. Congress has explicitly authorized the creation of income-driven repayment plans and entrusted the Department of Education with the task of determining the specifics of these programs.
Key Benefits of the SAVE Plan
Under the SAVE plan, a substantial number of borrowers could see significant financial relief. In fact, 8 million people are eligible for lower payments or even complete debt forgiveness. Here’s how the SAVE plan works:
- Income and Family Size: The repayment plan calculates monthly loan payments based on both income and family size.
- Discretionary Income: By taking into account discretionary income, the plan effectively lowers the amount owed for millions of borrowers.
This approach ensures that the burden of student loans is more manageable for a vast number of people.
Who Stands to Benefit?
Around half of the eligible borrowers will see their monthly payments drop to zero if they earn under $16 an hour. This provision is a game-changer for low-income individuals struggling with student debt, offering a lifeline to financial stability.
The SAVE plan’s robust legal foundation and its potential for significant financial relief make it a critical development in the realm of student loan repayment. For millions of borrowers, this plan represents a path to financial freedom and a brighter future.
In 2022, President Joe Biden introduced the SAVE Plan as part of a larger initiative aimed at addressing the student debt crisis. This broader plan initially proposed to cancel approximately $430 billion in debt, with specific provisions for $10,000 in federal student loan forgiveness for most borrowers and $20,000 for Pell Grant recipients.
The Supreme Court Roadblock
Despite the ambitious goals, the plan faced significant hurdles. In June 2023, the U.S. Supreme Court blocked the broader initiative after challenges from several Republican-led states. However, it’s important to note that the SAVE Plan itself was not addressed by the court as it was still pending finalization at that time.
Biden’s Unyielding Commitment
President Biden has remained steadfast in his commitment to student debt forgiveness, even in the face of legal challenges. He has consistently emphasized the importance of making higher education a gateway to the middle class rather than an obstacle.
“From day one, I promised to fix broken student loan programs and make sure higher education is a ticket to the middle class, not a barrier to opportunity,” Biden wrote on X, formerly Twitter, in March.