Kansas, Missouri attorneys general sue to block Biden student loan debt forgiveness plan

Kansas and Missouri have joined four other Republican-leaning states in a lawsuit aimed at blocking the Biden administration’s student loan forgiveness plan.

Missouri Attorney General Eric Schmitt and Kansas Attorney General Derek Schmidt, both Republicans running for higher office, signed onto a suit filed Thursday in the U.S. District Court for the Eastern District of Missouri alleging that the states’ loan servicer faces financial harm because of the loan forgiveness plan.

The plan, which Democratic President Joe Biden announced last month, will cancel at least $10,000 in debt for those making less than $125,000 or households making less than $250,000. The program would have provided relief to approximately 777,300 Missourians and more than 360,900 Kansans.

The lawsuit asks a federal judge to prevent the Biden administration from forgiving the student debt, arguing that cancellation is the responsibility of Congress and not the president.

Schmidt, the Republican nominee for Kansas governor, said during a campaign event in Park City that the plan was “fundamentally unfair to families who stepped up and paid off their own debts.”

“There is a cost to money, and signing a contract to borrow money includes a cost of interest for carrying the debt,” Schmidt said.

“There are a lot of small businesses that I’m sure would like to have their debt paid off by somebody else with no interest, but it’s not the way financial markets work.”

Small businesses have had federal loans forgiven during the pandemic. According to the federal government’s pandemic oversight website, 11.5 million Paycheck Protection Program loans were issued as of August 24, with most going to private businesses, and 10.2 million of those loans were partially or fully forgiven. The average amount forgiven was $72,500 for a total of more than $740 billion.

Biden’s student debt plan hinges on a law called the HEROES Act, passed during the Iraq War, which gives the president power to make changes to the federal student loan program during a national emergency. The Biden administration has said the ongoing emergency declaration for the COVID-19 pandemic gives him the authority to forgive student debt.

“Republican officials from these six states are standing with special interests, and fighting to stop relief for borrowers buried under mountains of debt,” White House assistant press secretary Abdullah Hasan said in a statement. “The President and his Administration are lawfully giving working and middle class families breathing room as they recover from the pandemic and prepare to resume loan payments in January.”

The plan is expected to cost about $400 billion over 30 years, according to estimates from the nonpartisan Congressional Budget Office.

The suit is led by Nebraska Attorney General Douglas Peterson. Arkansas, Iowa and South Carolina are also plaintiff states.

The debt cancellation program prompted immediate criticism from Republicans, who called it unfair to Americans who didn’t go to college, didn’t take out loans or had already paid off their loans.

“The Biden Administration’s executive action to cancel student loan debt was not only unconstitutional, it will unfairly burden working class families and those who chose not to take out loans or have paid them off with even more economic woes,” Schmitt, the Republican nominee for Missouri’s open U.S. Senate seat, said in a statement Thursday.

“The Biden Administration’s unlawful edict will only worsen inflation at a time when many Americans are struggling to get by.”

Missouri Democratic Senate nominee Trudy Busch Valentine did not immediately respond to questions about her Republican opponent’s decision to join the lawsuit.

Democratic Gov. Laura Kelly did not directly respond to questions about whether she supported Biden’s plan or Schmidt’s decision to include Kansas on the lawsuit. Instead, she touted her campaign’s tax policies in a statement.

“We’re focused on what’s happening here in Kansas to make things more affordable, not on what Schmidt is doing in Washington,” Kelly said, listing off proposals, such as a sales tax holiday on school supplies and offering tax relief to seniors.

Kansas Treasurer Lynn Rogers, a Democrat up for reelection, called the Republican effort to block debt relief short-sighted in a news release. He touted a plan he put forward with Kansas House Democrats last month that included tuition tax credits and incentives for businesses with loan repayment programs.

“Education is one of the foundations of society, and making it so folks can afford to invest in themselves without being trapped in a cycle of debt is important to us all,” Rogers said. “Making the process easier for students should be the focus of elected officials, not making it harder.”

Biden unveiled the student debt plan in August in an attempt to appease a Democratic base that has long called for student loan forgiveness for a generation of college graduates saddled by thousands of dollars in loans.

But while Democrats may have hoped that the Biden plan would galvanize their base ahead of the Nov. 8 election, candidates in conservative states appear to have shied away from it. Rep. Sharice Davids, who is in one of the most competitive House districts in the 2022 election, distanced herself from Biden’s plan in August.

“It’s not how I would have addressed the issue,” Davids, a Kansas Democrat, said at the time. “I think we should focus on making higher education and technical schools more affordable in the first place and expose students to trades and apprenticeships that help them get good-paying jobs—like those created by the new infrastructure law—without a four-year degree.”

The Star’s Jonathan Shorman and The Wichita Eagle’s Matthew Kelly contributed reporting