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Three states can proceed with a lawsuit challenging the Biden administration’s new income-driven repayment plan for student loan borrowers known as Saving on a Valuable Education or SAVE, a federal judge ruled Friday. At the same time, he dismissed eight other plaintiff states from the case.
The lawsuit, initially brought by Kansas and 10 other states, argues that the IDR plan exceeds the Education Department’s authority, hurts the states’ bottom lines and represents just another version of the broad-based debt-relief plan that the Supreme Court struck down last summer in Biden v. Nebraska. It’s one of two lawsuits from Republican-led states challenging the plan.
Lawyers for the Biden administration sought to throw out the Kansas-led suit on the grounds that the states didn’t have standing to bring their legal challenge. The states argued in part that they would lose tax revenue because of the plan. The Biden administration said those claims were “speculative.”
“Plaintiffs clearly have policy and legal disagreements with the [Education] Secretary’s approach to student loans, but their standing theories give them no basis to air those grievances in federal court,” the Biden administration wrote.
The judge partly agreed, finding that eight of the 11 states ”have no skin in the game,” and thus don't have standing.
The other three states—South Carolina, Alaska and Texas— have “public instrumentalities” that hold federal family education loans, which they claim could be negatively impacted by SAVE. That’s a standing claim similar to the one used by Missouri in Biden v. Nebraska, and the judge found it to be credible.
The judge ruled those three states “shouldered their burden to show the SAVE Plan likely will reduce the revenue of South Carolina, Texas, and Alaska’s public instrumentalities—but just barely. Their standing theory is weaker than the one that prevailed in Biden v. Nebraska.”
