A group of GOP states, led by Missouri Attorney General Andrew Bailey, has filed a lawsuit to block President Joe Biden's new SAVE income-driven repayment plan. This is the second lawsuit so far to challenge the student-loan repayment plan, which was established in July 2023 to provide borrowers with more affordable monthly payments.
The lawsuit argues that the SAVE plan is unconstitutional and in defiance of a Supreme Court decision that blocked Biden's previous attempt at broad debt relief. Specifically, the lawsuit takes issue with the early implementation of a provision of SAVE that provided $1.2 billion in debt relief to 153,000 borrowers who originally borrowed $12,000 or less and made as few as 10 years of qualifying payments.
One of the key arguments in the lawsuit is that the SAVE plan would harm the revenue of student-loan company MOHELA, which is based in Missouri. The states also claim that the plan diminishes the value of the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.
This lawsuit comes on the heels of another lawsuit filed by 11 GOP state attorneys general targeting the SAVE plan. The Education Department has not commented on the pending litigation but has noted that it has the authority to define the terms of income-driven repayment plans.
Overall, the lawsuit against the SAVE plan raises concerns about its impact on student-loan companies, the Public Service Loan Forgiveness program, and the broader implications of debt relief policies. It remains to be seen how the courts will ultimately rule on this legal challenge.