Lily Verren, Campus Carrier staff writer
On Sept. 29, several Attorney Generals and other representatives from six states announced a lawsuit aiming to overturn President Joe Biden’s Student Debt Relief Plan. The suit, led by Arkansas Attorney General Leslie Rutledge, alleges that Biden violated federal law and the principles of the separation of powers by announcing the plan.
According to the complaints of the lawsuit, “No statute permits President Biden to unilaterally relieve millions of individuals from their obligation to pay loans they voluntarily assumed.” In addition to Arkansas, the states included in the lawsuit are Missouri, Iowa, Kansas, Nebraska and South Carolina.
Biden announced his administration’s plan on Aug. 24, which consists of three planned stages. According to the Department of Education’s Office of Federal Student Aid, the plan is currently in part one, which is the extension of Biden’s student debt repayment pause through December of this year. That repayment pause has been in effect since Biden’s first day of office in January 2021.
According to the Office of Federal Student Aid, the rules in consideration for proposal include lowering the maximum threshold of discretionary income that borrowers can pay to 5%, of what was previously 10%. Furthermore, part three plans to raise the threshold of disposable income that cannot be considered discretionary. That would mean that borrowers earning less than 225% of the poverty line would not need to make monthly payments above $0.
While disposable income is any amount of income earned by a household after taxes, discretionary income is a designated amount of income that earners are free to delegate to any financial pursuit, i.e., income after taxes and expenses like food, rent and car payments.
The prospective rules also include forgiving balances lower than $12,000 after 10 years of timely payments, lowering that time from what is currently 20 years. The rules would also require unpaid monthly interest on loans with timely payments to be financially covered, so that the total balance of the loan would never increase if regular payments were made.
With the 2022 midterm elections approaching, Biden decided to stop waiting for Congress to pass student debt relief legislation and announced the plan as an executive action.
Eric Sands, associate professor of political science at Berry, said, “The biggest [reason] is frustration. This was one of his signature items that he had promised on the campaign trail, and Congress is dragging its feet and hasn’t gotten it done. So, he is stepping forward now and is trying to act on his own.”
Congress has not yet been able to pass legislation about the current student debt crisis for several reasons. Sands said that a large part of the issue is specifically about how much debt should be relieved.
“Some liberal Democrats want to forgive all student loans,” Sands said. “And more conservative members of Congress, if they’re even willing to talk about forgiving student loans, want to forgive a much smaller amount. There hasn’t been a meeting of the minds of what the amount should be.”
Biden was able to address the student loan debt so far because the loans are federal, rather than a mortgage or car title to a bank, which key for them in terms of government forgiveness.
where you know the bank owns the title to your vehicle.”
Following the announced lawsuit, the Biden-Harris administration made a change to the plan: on Sept. 29, privately held federal loans lost eligibility for relief, according to the Office of Federal Student Aid.
Rutledge’s lawsuit alleges that Biden violated the principles of the separation of powers with his plan.
“Congress passed legislation that created our student loan program, [so] that students could borrow money for college under certain conditions, and then they had to repay it,” Sands said. “The executive branch is supposed to administer that program to ensure that the money is distributed to the students, and then to ensure that they’re paying it back.”
According to Sands, Biden is getting backlash from Congress and the Attorney Generals because he is short circuiting the loan process.
“You know he’s now saying, well, you don’t have to pay [a portion of] this back,” Sands said. “That looks a lot like writing new legislation, and writing new legislation is a legislative function, not an executive one.”
Ultimately, the problem is one of disconnect between Congress and the seat of the president, according to Sands. It’s a problem that doesn’t start or end at misuse of executive action.
Applications for debt relief will be open until the end of December 2022. More information about the Student Debt Relief Plan can be found at studentaid.gov/debt-relief-announcement/.