Nebraska AG joins five states suing the Biden administration to stop student debt cancellation

OMAHA — College borrowers banking on President Joe Biden’s plan to forgive up to $20,000 in student loan debt hit a potential snag Thursday, when Nebraska and five other states filed a lawsuit challenging the Department of Education’s authority to do so.

Theirs was the second major lawsuit filed by conservatives trying to stop the student loan forgiveness plan. The first came Tuesday, from a lawyer in Indiana who argued he would be forced to pay state taxes on student loan forgiveness he didn’t seek. On Thursday, the judge denied the plaintiff’s request for a temporary restraining order and a preliminary injunction and gave him until Oct. 10 to amend his complaint.

The lawsuit filed by the Republican attorneys general of Nebraska, Kansas, Missouri, Arkansas and South Carolina, and signed onto by Iowa’s GOP Gov. Kim Reynolds, argues that Congress never approved massive student loan cancellation. It asserts that the Biden administration and the U.S. Education Department aim to misuse emergency authority.

“Until now,” the lawsuit argues, “no one thought that such a power lurked within the HEROES Act, or any other existing federal law.” 

Nebraska Attorney General Doug Peterson and his cohorts argue the administration improperly interpreted a 2003 federal law passed to help military members and people responding to national emergencies dislodge student debt more easily. 

The Justice Department argued in an August memo that the Higher Education Relief Opportunities for Students Act of 2003 allows the department to approve broader debt forgiveness during national emergencies, including the COVID-19 pandemic.

The lawsuit filed Thursday argues that the record does not reflect this reading of the law. Even if the administration proves right, the AGs argue that applicants should have to detail their pandemic-related losses and not have their debts forgiven automatically. 

Under the administration’s program, Pell Grant recipients could receive up to $20,000 in debt relief, and other borrowers could get up to $10,000. Over 40 million borrowers nationally were estimated to be eligible for the plan. 

In Nebraska, an estimated 232,100 students could qualify for the debt relief, including 136,000 Pell Grant recipients, according to the Education Department.

The program requires most people seeking student debt relief to apply. The Education Department sent an email Thursday saying the first applications will go out in October. But 8 million Americans could receive relief automatically, the Washington Post has reported.

Nebraska Gov. Pete Ricketts applauded Peterson for “leading the effort” to hold the Biden administration “accountable to the law.”

“President Biden’s student loan forgiveness scheme is fundamentally unfair and would harm the American families forced to pay for it,” Ricketts said.

The lawsuit seeks an immediate injunction pausing student debt relief and have asked the U.S. federal court in the Eastern District of Missouri to clarify whether the administration lacks the legal authority to forgive the debt.

The attorneys argue potential harm to state tax revenues, student loan processors and state investment boards that handle public pensions. A University of Pennsylvania study estimated the program would cost federal taxpayers up to $519 billion over 10 years.

The lawsuit pointed to earlier statements from Biden and House Speaker Nancy Pelosi arguing for the need to pass a law to forgive student debt. National supporters of the president’s plan have said Biden’s approach is legally sound.

But legal observers have noted efforts by the U.S. Supreme Court to rein in regulatory agencies such as the Environmental Protection Agency from acting beyond their statutory authority and have said it’s possible the court might do the same to the Education Department.

Neb. v. Biden