ST. LOUIS — Missouri, Kansas and four other states have filed a joint lawsuit against President Joe Biden and others in an effort to stop the president’s college loan forgiveness program.
In a hearing Wednesday at the Downtown Federal Court Building in St. Louis, plaintiffs spent several hours arguing in support of the lawsuit, citing “irreparable harm” to student loan agencies in Missouri and beyond. The hearing is currently in recess and accessible only through audio.
The Biden Administration’s student loan forgiveness plans calls for forgiving up to $20,000 of student loan debt for certain individuals who make less than $125,000 annually or $250,000 annually as a married couple.
Two speakers Wednesday contended that the plan would lead to tax harms, consolidation harms and harms in public interest.
Some states tied to the lawsuit, like Nebraska and Kansas, do not collect taxes when student loans are discharged. Plaintiffs argue the Biden administration’s plan would lead to millions in lost revenue for such states and that states should not have to change laws to avoid such losses.
“Forcing a state to change its laws in itself is an injury,” said one speaker Wednesday on behalf of the plaintiffs.
Plaintiffs also noted consolidation harms, or alleged losses based on multiple debts being combined into one loan. In such cases, borrowers might have lower interest rates. The lawsuit contends MOHELA is authorized by the state of Missouri to “engage in loan servicing, among other revenue-producing activities, to fulfill the ‘essential public function[s].'” Plaintiffs say consolidating would lead to losses the state could not recover once the Biden administration’s plan takes effect.
“The amount of authority the defendants have through the HEROES Act, there’s nothing stopping them,” said one plaintiff.
A judge later noted that Missouri hasn’t established that it can sue for MOHELA’s losses unless the state claimed legal liability to pay judgment.
As for public interests, the plaintiffs allege that while the goal is protect student loan borrowers, millions would be “better off with continued forbearance rather than cancellation because it’s preferable to have no payment instead of a reduced payment,” according to the lawsuit.
Through the arguments, attorneys general from Missouri and other states are requesting a federal judge in Missouri to block the start of the student loan cancellation program. The complaint leading to Wednesday’s proceedings was filed on Sept. 29.