President Joe Biden’s plan to cancel billions in federal student loan debt is facing a new legal challenge, this time from six conservative-leaning states. Arkansas is leading the charge, joined by Iowa, Kansas, Missouri, Nebraska and South Carolina.
, a state agency that offers private student loans to cover higher education costs, said a drop in revenue would affect its ability to offer new loans.
That entity oversees loans issued directly by the Education Department, known as Direct Loans, and privately held student loans backed by the federal government known as the Federal Family Education Loan program. Borrowers had been able to consolidate these FFEL loans into accounts directly owned by the Education Department, which then gives the federal government the ability to cancel borrowers’ debts.
It’s unclear if the department’s decision was tied to the lawsuit. But it's not the first time the Department has offered additional details about the debt cancellation program when facing a legal challenge., saying some borrowers would be hurt by the debt cancellation. Specifically, some states plan to tax the debt forgiveness, and the foundation, a libertarian-aligned law firm, argued that borrowers residing in those states would be harmed by widespread debt discharge.
But an injunction could affect the entire universe of borrowers eligible for loan forgiveness, roughly 40 million people.
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