U.S. Judge Blocks Biden’s Student Debt Forgiveness Plan

By Nate Raymond

A U.S. judge has temporarily halted President Biden’s student debt forgiveness plan following a lawsuit from seven Republican-led states.

U.S. District Judge J. Randal Hall in Augusta, Georgia, ruled that the states demonstrated a likelihood of proving the Education Department lacked the authority to implement this plan, which was allegedly to cancel student loans shortly.

Hall emphasized the significance of recent rulings nationwide that have invalidated similar federal loan forgiveness plans. The judge issued a temporary restraining order after a lawsuit was filed on the proposed rule from April, which aimed to provide full or partial debt relief to specific borrowers.

The rule could impact around 27.6 million borrowers, but the states allege documents reveal the Education Department directed federal loan servicers to start cancelling loans imminently, risking the unlawful forgiveness of $73 billion in debt.

The states, spearheaded by Missouri, contended that the Education Department does not possess the authority to execute this kind of debt forgiveness. Estimates indicated the program’s cost at $146.9 billion, though the states believe it’s in the hundreds of billions.

Hall issued the order swiftly to maintain the status quo until a hearing on September 18.

The White House firmly opposed Hall’s ruling, asserting it was an overreach based on misconceptions perpetuated by Republican officials. Republicans criticized the debt forgiveness cost, claiming it is unfair for taxpayers to subsidize others’ educational expenses.

Missouri Attorney General Andrew Bailey called the ruling a significant victory for taxpayers, while an Education Department spokesperson stated they are reviewing the ruling and will hold off on implementing the draft rule until finalized.

This lawsuit represents the latest legal challenge to Biden’s promises to provide debt relief to millions of borrowers reliant on federal loans for higher education. Under his administration, $169 billion in debt relief has already been authorized for nearly 4.8 million people.

In June 2023, Republican-led states successfully persuaded the U.S. Supreme Court to block a $430 billion initiative aimed at canceling up to $20,000 per borrower for 43 million Americans. Consequently, the administration pivoted to the SAVE plan targeting lower monthly payments and expedited forgiveness, but was met with further legal obstruction.

The Supreme Court declined to lift the injunction against the SAVE plan on August 28, 2023.