Over a dozen GOP states seeking to block student-loan forgiveness through Biden's SAVE repayment plan may have been set back by a separate court ruling
President Joe Biden has been using one-time account adjustments to give student-debt relief to targeted groups of borrowers.
The Sixth Circuit rejected a lawsuit to block these account adjustments, saying it doesn't have standing.
A separate ongoing lawsuit to block Biden's latest relief plan used the same argument.
Lawsuits to block some of President Joe Biden's targeted student-debt relief efforts are simmering — and a court ruling might have signaled how one case will fare.
In October, the New Civil Liberties Alliance filed a lawsuit on behalf of conservative groups the Cato Institute and Mackinac Center for Public Policy to block student-debt relief through the Education Department's one-time account adjustments.
The adjustments allow borrowers on income-driven repayment plans and Public Service Loan Forgiveness an additional opportunity to have their payment counts evaluated, potentially giving them more credit toward loan forgiveness.
The conservative groups argued that the adjustments were unconstitutional and, as nonprofits, undermined their recruiting efforts toward PSLF, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.
"When an agency arbitrarily reduces the financial incentive for student-loan debtors to seek and remain in jobs with public service employers, at any given wage, the supply of workers willing to take and keep jobs with such employers inevitably falls," the groups wrote in an appeal to the Sixth Circuit.
But the Sixth Circuit wasn't convinced. On May 17, it rejected the groups' appeal, writing in its decision that the idea that the account adjustment will reduce the appeal of PSLF is "unconvincing and illogical."
"Plaintiffs have not alleged that any of their employees have stopped seeking PSLF forgiveness because of the adjustment," the court's decision said. "And without supporting facts, the claim is pure conjecture, not enough to show a competitive injury."
An ongoing separate lawsuit had the same argument — for a different program. In March, 11 GOP state attorneys general filed a lawsuit to block the SAVE income-driven repayment plan, which the Education Department implemented last summer to give borrowers more affordable monthly payments.
Seven additional GOP attorneys general filed a lawsuit to block SAVE in April, arguing that the new repayment plan diminishes the value of PSLF and harms the states' efforts to recruit people to the public sector.
Biden's Education Department filed a response to the lawsuit on Friday, citing the Sixth Circuit's decision to reject the New Civil Lebrties Alliances's argument that the account adjustments would hurt the nonprofits' PSLF recruitment efforts.
"Plaintiffs offer the examples of hypothetical current and prospective employees and predict, based on 'the concept of economic incentives,' how they might act. Economic assumptions alone were not enough for the Sixth Circuit, nor, for that matter, for the Supreme Court," the Education Department wrote in its legal filing.
"At base, career-related decisions are complicated, and PSLF is not the sole incentive in this economic picture," the department added. "Plaintiffs would have Defendants and the Court sort out this complexity on their behalf. But standing is their burden alone, and they have not carried it here."
It's unclear when the court will rule on the lawsuits to block SAVE, but given the Sixth Circuit's ruling on the prior lawsuit to block Biden's account adjustments, it could signal how judges are considering opponents' arguments to block targeted student-debt relief efforts.
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