President Joe Biden delivers remarks on student loan debt at Madison College, Monday, April 8, 2024, in Madison, Wis. WASHINGTON — Another group of Republican-led states is suing to block the Biden administration’s new student loan repayment plan, which offers a faster path to cancellation and has already been used to forgive loans for more than 150,000 borrowers.
Filed just a day after Biden trumpeted a new proposal to cancel student loans for millions of borrowers, the lawsuit sets the stage for one legal battle and foreshadows another. The suit doesn’t directly challenge Biden’s newest plan for cancellation, but its architect, Missouri’s attorney general, separately threatened to bring action against that plan, too.
The lawsuit reprises a courtroom showdown between the Biden administration and Missouri, which was a central figure in the Supreme Court case that overturned the Democratic president’s first try at loan cancellation last year. Congress created income-driven repayment plans in the 1990s to help borrowers who were struggling to make payments on student loans. Those plans capped payments based on a borrower’s income and promised to cancel any remaining debt after 20 or 25 years.
The plan’s provisions are being phased in this year, with the faster path to cancellation originally scheduled to take effect in July. But the Biden administration accelerated that benefit and started canceling loans for some borrowers in February. “Once the Final Rule takes effect, however, PSLF will not be nearly as attractive compared to other income-driven repayment programs,” the suit says. “Its comparative advantage will shrink or disappear entirely.”
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