Missouri Attorney General joins five other states in filing suit challenging student loan cancellation program

A gavel and a name plate with the engraving Lawsuit

Missouri Attorney General Eric Schmitt joined five other states in filing a challenge to the Biden Administration’s student loan cancellation program in federal court in Missouri. In the lawsuit, the states ask the Court for an immediate temporary restraining order pausing the program. Prompt relief is being sought because the Biden Administration has indicated it will start canceling loan balances as early as next week.

“The Biden Administration’s executive action to cancel student loan debt was not only unconstitutional, but it will also unfairly burden working-class families and those who chose not to take out loans or have paid them off with even more economic woes,” said Attorney General Schmitt. “The Biden Administration’s unlawful edict will only worsen inflation at a time when many Americans are struggling to get by”

The lawsuit states, “Just months ago, the Supreme Court warned federal agencies against ‘asserting highly consequential power beyond what Congress could reasonably be understood to have granted by statute. Yet the Administration’s Mass Debt Cancellation does precisely that. Determined to pursue across-the-board debt cancellation and stymied by repeated failures to achieve that goal through legislation, the Administration resorted to a federal law whose purpose is to provide relief to individuals who have suffered from an emergency like the 9/11 terrorist attacks or who must serve their country overseas in the military.”

The lawsuit continues, “On January 12, 2021, the United States Department of Education (ED) published a memorandum concluding that mass student- loan debt cancellation could not be accomplished through executive action. ED noted that it ‘has never relied on the HEROES Act or any other statutory, regulatory, or interpretative authority for the blanket or mass cancellation … of student loan principal balances, and/or the material change of repayment amounts or terms.’”

The lawsuit also states, “The majority of the Mass Debt Cancellation will ‘accrue to the debt borrowers in the top 60 percent of the income distribution.’ And none of the benefits will accrue to those who worked and paid their debt.” Citing that same study, the lawsuit notes, “The Wharton School of the University of Pennsylvania released a study concluding that ED’s Mass Debt Cancellation alone will cost up to $519 billion over ten years, and the overall cost could rise to more than $1 trillion when factoring in the other components of ED’s announcement.”

The lawsuit incorporates three counts: (1) Separation of Powers, (2) Violation of the Administrative Procedure Act Exceeding Statutory Authority and Violating the Constitution, and (3) Violation of the Administrative Procedure Act Arbitrary and Capricious Agency Action.

States joining Missouri in the filing include Arkansas, Iowa, Kansas, Nebraska, and South Carolina.

The petition can be found here