30 million student-loan borrowers who were about to benefit from Biden's second try at broad debt cancellation are now facing the first lawsuit to block it

• Seven GOP-led states filed the first lawsuit against Biden's broader student-loan forgiveness plan.
• The states say Biden is planning to implement the relief before the final rule is published.
• They're requesting the relief's implementation be blocked as the legal process continues.

President Joe Biden's second try at broader student-loan forgiveness just got hit with its first legal challenge.

On Tuesday, seven GOP state attorneys general filed a lawsuit in the Southern District of Georgia to block Biden's second try at debt relief using the Higher Education Act of 1965.

The lawsuit is targeting the plan the Education Department announced last summer after the Supreme Court struck down Biden's first attempt at broad debt relief . Expected to benefit more than 30 million borrowers, the plan would cancel some or all student debt for borrowers with unpaid interest, those who have been in repayment for at least 20 years, and those who attended schools that left them with too much debt compared with postgraduation earnings, among other things.

The final rule for the relief has yet to be published, and the Education Department previously announced it was planning to begin implementing the relief in October . But the lawsuit says the department has been working on the plan's implementation prior to publishing the final rule, according to internal documents they obtained from the department to servicers, and calls for the court to put a stop to the relief pending a final legal decision.

"Not only is this attempt the Secretary's most aggressive," the lawsuit says. "It is also the weakest one yet. The Secretary has already failed to mass cancel student loans with the two statutes he thought were more plausible. It is thus unsurprising that this third plan rests on the least plausible textual authority yet."

The GOP-led states say the department is planning to enact the relief as early as this month. According to the internal documents the states obtained, attached alongside the lawsuit, the Education Department sent a memo to the servicer MOHELA saying, "In September of 2024, the Biden-Harris Administration will launch the Federal Student Loan Debt Initiative."

The documents don't indicate which specific parts of the relief, if any, would have been implemented in September, but the lawsuit argues that the department isn't adhering to the regulatory process by making plans to get the relief to borrowers prior to the final rule.

An Education Department spokesperson told Business Insider that while the department doesn't comment on pending litigation, it will "continue to fight for borrowers across the country who are struggling to repay their federal student loans."

"The Department remains committed to supporting borrowers and fighting for affordable repayment options and relief for those who qualify," the spokesperson said ."We will continue to follow the law as we work to prepare for possible debt relief this fall, which would only be implemented after the proposed rules first introduced this spring are finalized."

The states also argue that the relief would harm the student-loan company MOHELA, which is based in Missouri, one of the states leading the lawsuit. They say MOHELA would lose revenue through forgiven loans, and the plan would increase administrative costs for the servicer.

The Education Department hasn't yet commented on how this will impact its plans for broad relief. At the same time, Biden's new SAVE income-driven repayment plan is blocked in court following a lawsuit from a group of GOP state attorneys general who sued to block cheaper payments and debt cancellation, with more than 8 million enrolled borrowers waiting in limbo pending a final decision.