Kansas attorney general sues to block Biden student loan debt forgiveness plan

Kansas has joined five other Republican-leaning states in a lawsuit aimed at blocking the Biden administration’s student loan forgiveness plan.

Kansas Attorney General Derek Schmidt signed onto a suit filed Thursday in the U.S. District Court for the Eastern District of Missouri alleging that the state’s 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 360,900 Kansans and 777,300 Missourians.

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.

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, Missouri and South Carolina’s attorneys general also signed on.

The White House also did not immediately respond to a request for comment.

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.

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.

Contributing: Jonathan Shorman of the Kansas City Star

This story was originally published September 29, 2022 at 2:22 PM with the headline "Kansas attorney general sues to block Biden student loan debt forgiveness plan."