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State Attorneys General Sue to Halt Cancellation of Student Loan Debt


On September 29, 2022, the Attorneys General of Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina filed a complaint in the U.S. District Court for the Eastern District of Missouri against President Biden, Secretary of Education Miguel Cardona, and the U.S. Department of Education (4:22-cv-01040) seeking to halt implementation of the Biden Administration’s student loan relief plan announced on August 24, 2022. The student loan relief plan would see the Department of Education provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers would be eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples).

In a press release addressing the Complaint, Arkansas Attorney General Leslie Rutledge stated:  “President Biden does not have the power to arbitrarily erase the college debt of adults who chose to take out those loans.” Subsequently, on October 3, 2022, the parties to the lawsuit filed a joint stipulation withdrawing the State AGs’ motion for a temporary restraining order based upon the Biden Administration’s representations that it would not discharge any student loan debt pursuant to the student loan relief plan before October 17, and that the Defendants would respond to the State AG’s motion for a preliminary injunction by October 7.

The Complaint alleges that the statutory basis for the student loan relief plan, the Higher Education Relief Opportunities for Students Act of 2003 (the “HEROES Act”), does not permit the Biden Administration to cancel federal student debt without a determination that: (1) the pandemic was a but-for cause of any financial harm addressed by the student loan relief plan; and (2) the cancellation of debt will put borrowers back in the financial position they would have been in if not for the COVID-19 pandemic—both of which the State AGs contend that the Biden Administration did not and cannot establish, as “most borrowers are better off today than before the pandemic with respect to their student loans because they have paid nothing for nearly three years, no interest has accrued on their loans, and rampant inflation has reduced the real-dollar value of their debts.” Additionally, the Complaint suggests that the HEROES Act requires “individualized determinations of economic hardship,” and that it cannot be “plausibly be read to accord with ED’s Mass Debt Cancellation.”

Further, the Complaint alleges that the HEROES Act, which was passed during the Iraq War and military operations in Afghanistan, was intended by Congress, per the Act’s preamble, “to provide the Secretary of Education with specific waiver authority to respond to a war or other military operation or national emergency.” The Biden Administration’s plan, according to the Complaint, provides relief “to every borrower regardless of whether her income rose or fell during the pandemic or whether she is in a better position today as to her student loans than before the pandemic.”

As to standing—an element that many commentators have suggested could prove challenging for a plaintiff to establish—the Complaint alleges that the student loan relief plan would harm the plaintiff States’ financial and proprietary interests, including specifically as to the Arkansas Student Loan Authority and the Missouri Higher Education Loan Authority, both of which the Complaint alleges would be deprived by the Biden Administration’s plan of ongoing interest payments that the to-be-forgiven loans would otherwise have generated.

The matter is now set for oral argument on October 12 on the State AGs’ motion for a preliminary injunction.

In the interim, however, additional federal challenges to the Biden Administration’s plan have been filed by the Arizona Attorney General in the U.S. District Court for District of Arizona (2:2022cv01661) and by a Wisconsin taxpayers’ association in the U.S. District Court for the Eastern District of Wisconsin (1:22-cv-01171). In a press release addressing Arizona’s complaint, Attorney General Mark Brnovich stated that:

“The Biden administration does not have the authority to cancel student debt. Despite being told by members of congress he cannot pursue such an action, Biden is relying on the Higher Education Relief Opportunities for Students Act (HEROES Act) and the COVID-19 pandemic. The HEROES Act was a response to the September 11th attacks to relieve active-duty personnel from financial hardship while defending our nation. The act also includes individuals who reside in disaster areas affected by a national emergency. The president attempts to stretch the HEROES Act to assert authority over all borrowers in the country, citing the COVID-19 pandemic as a national emergency and the entire United States as a disaster area.”

Further, the Arizona complaint notes that Arizona would be harmed in several ways, including the Arizona Office of the Attorney General, which relies upon the availability of other student debt forgiveness programs to recruit legal talent.

In contrast, the Wisconsin-based Brown County Taxpayers Association alleges that the student loan relief plan: “violates the US Constitution’s separation of powers between Congress and the Executive branch.” The complaint also claims the Plan breaches the 5th Amendment’s equal protection doctrine by expressly stating that its purpose is to advance “racial equity.”



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