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State Attorneys General file lawsuit against student loan forgiveness

MARY LOUISE KELLY, HOST:

The U.S. Department of Education is preparing quietly to erase tens of billions of dollars in loans overnight. Well, that is what a handful of Republican state attorneys general allege in a new lawsuit, a lawsuit to try to block the Biden administration's latest student loan efforts. NPR's Cory Turner joins me. Hey there, Cory.

CORY TURNER, BYLINE: Hey, Mary Louise.

KELLY: OK, there are so many student loan lawsuits. Where does this one fit in?

TURNER: Yeah. OK, so I'm going to try to do a totally not boring refresher, Mary Louise. It all started two years ago when President Biden unveiled his really, really big plan to erase at least some student loan debt for most borrowers. We're going to call that one Student Loan Forgiveness Plan A, OK? Then a bunch of Republican states sued, arguing Biden can't do that without Congress, and the Supreme Court ultimately agreed, killing Plan A.

But then, really quickly, President Biden came back out and said, we're not giving up. Stay tuned for Plan B. Now, that just brings us up to this past April when President Biden himself sort of roughly outlined this Plan B, promising forgiveness for several smaller groups of really vulnerable borrowers. And then over this past summer, the Education Department has been writing a final draft of this Plan B behind closed doors.

KELLY: OK. So we're at Plan B, the final draft, except is it final? I mean, is it actually done?

TURNER: Well, that is the question. And it brings us to this lawsuit because in the suit, Republican states say, it is essentially done, and the Education Department has been quietly telling its loan servicers, get ready, guys. We want you ready to erase a ton of student loan debts as soon as the department drops the final version of this Plan B.

And these states want the courts to essentially step in and block the department from going ahead with that loan forgiveness because, as the saying goes, once the horse is out of the barn, it's kind of hard to put it back in or to unforgive (ph) student loans. And I should say, these attorneys general feel pretty confident that just as Biden's Plan A did not hold up in court, they don't think Plan B will either.

KELLY: And Cory, tell me more about what Plan B actually is. Who is it meant to help?

TURNER: Yeah, so a few groups - there are borrowers from schools where the degrees are now pretty worthless, maybe because the school has been shut down. Also borrowers whose loans are at least 20 years old - but Mary Louise, the biggest group, and maybe the most interesting, are the more than 25 million borrowers who now owe more than they borrowed originally because of accrued interest. Now, Plan B would not erase all of their debts, but it would erase some or all of that interest.

KELLY: So where does this go? What happens now?

TURNER: Well, we're back to waiting for the courts again. And keep in mind, the courts are also debating - this is part of the reason why this is all so confusing - they're also debating Biden's big new repayment plan called SAVE and whether or not it's legal. Let's call that one Plan C because it also got challenged for being too generous.

You know, Mary Louise, I have spoken with experts on various sides of this conflict around student loan forgiveness, and the one thing they can all agree on right now is the loan system is a mess.

KELLY: NPR's Cory Turner. Thanks, Cory.

TURNER: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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Cory Turner reports and edits for the NPR Ed team. He's helped lead several of the team's signature reporting projects, including "The Truth About America's Graduation Rate" (2015), the groundbreaking "School Money" series (2016), "Raising Kings: A Year Of Love And Struggle At Ron Brown College Prep" (2017), and the NPR Life Kit parenting podcast with Sesame Workshop (2019). His year-long investigation with NPR's Chris Arnold, "The Trouble With TEACH Grants" (2018), led the U.S. Department of Education to change the rules of a troubled federal grant program that had unfairly hurt thousands of teachers.
Mary Louise Kelly is a co-host of All Things Considered, NPR's award-winning afternoon newsmagazine.