Last year, the first of the Biden-Harris administration’s sweeping loan forgiveness efforts was struck down by the Supreme Court. The Saving on a Valuable Education Plan (SAVE), which is essentially loan forgiveness disguised as loan repayment, is the second attempt. It is facing challenges from 18 Republican states, remains on hold, and will likely eventually make its way to the Supreme Court.

Before the legality of this second installment of loan forgiveness is even determined, however, a third effort is already underway. It was announced just moments after the Supreme Court declared the Administration’s initial forgiveness effort to be illegal.

Part III is no more justified on the merits, but it uses a different legal authority not tied to COVID-related emergency powers. While the cost of this third effort may seem affordable at only $147 billion (as compared with $475 billion with SAVE), this can be misleading because many of the same loans can be forgiven through either program. Challengers to loan forgiveness won the first bout, but unless they remain undefeated, most of the loans will be forgiven one way or another.

While each plan is unsavory, the latest loan forgiveness attempt is particularly egregious because it is so obviously tied to election-year politics. Earlier this month, I warned:

The Biden-Harris team has signaled that it’s gearing up for an “October Surprise” on student loan cancellation — although it might come even sooner, sneaking in before early voting starts…The Biden-Harris team knows that its actions are illegal, and courts will likely rule against them. So they may be planning to trigger loan cancellations the moment the department publishes its final rule, in a ruthless effort to avoid accountability or give taxpayers their day in court.

It was already clear that “state attorneys general will need to act once more if they wish to stop this new tranche of loan forgiveness.” Fortunately, they have.

Attorneys general from Missouri, Georgia, Alabama, Arkansas, Florida, North Dakota, and Ohio have joined the latest effort to ensure that the executive branch does not have the authority to spend hundreds of billions of dollars without Congressional permission. In their suit, they are seeking emergency relief in a Georgia federal district court to prevent the Administration from quickly canceling loans before anyone can stop them.

They allege, “Courts stopped him the first two times, when he tried to do so openly. So now he is trying to do so through cloak and dagger… this time, the Secretary quietly sent orders to loan servicing companies to start mass canceling loans as soon as this week. [emphasis in original]”

As with the other cases, this third attempt at loan forgiveness will need to wind its way through the courts before a final determination is made. However, these seven states are likely hoping for a similar outcome to SAVE: Win an injunction to prevent loans from being canceled. From there, they can hope that either the Supreme Court will eventually declare the plan illegal, or voters will weigh in and put a new administration in charge of the Department of Education.

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