A U.S. district judge will hear arguments Wednesday that could put the student loan forgiveness program on hold.
A suit filed by six states’ attorneys general asks the court to suspend the program because it claims the Biden administration did not have the legal authority to cancel student loan debts.
The six states — Missouri, Arkansas, Kansas, Nebraska, South Carolina, and Iowa — filed the lawsuit in a federal court in Missouri in September. District Judge Henry Autrey will be hearing the case.
According to court filings, the Biden administration claims the authority to forgive the loans comes from the HEROES Act passed in 2003 following the Sept. 11, 2001, terror attacks.
That law grants the education secretary the power to “alleviate hardship” that federal student loan borrowers are experiencing because of a national emergency, such as the pandemic. The Biden administration issued a memo from the Department of Justice’s office of legal counsel saying the HEROS Act covers the move.
Attorneys for the states filing the suit say the HEROES act does not give the Biden administration the authority to forgive the debt since that authority comes only in the case of a national emergency.
Additionally, lawyers for the six states claim that the program would cut revenue to companies that service federally backed student loans. The suit names a loan servicer based in Missouri called MOHELA.
The suit is one of several filed in the past two weeks that take aim at the program that cancels $10,000 in student loan debt for those making less than $125,000 a year, or households making less than $250,000.
Pell Grant recipients will be eligible for an additional $10,000 in debt forgiveness.
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