A federal judge placed a temporary hold on another component of President Biden’s student debt relief plan on Thursday, siding with a coalition of seven Republican states that filed a lawsuit to halt the program on Tuesday.
The ruling comes as yet another blow to the president’s student debt relief agenda after the Supreme Court upheld a similar hold on the SAVE program, the centerpiece of his strategy to cancel tens of millions of dollars in student debt.
The plan at issue in Thursday’s ruling is meant to cancel debt for as many as 27 million borrowers who saw interest on their loans balloon over time, or who were still paying off loans after at least 20 years.
Even though the policy was not scheduled to go into effect until the fall, the states bringing the lawsuit argued that they had obtained evidence that the Education Department had notified federal contractors to “immediately” begin canceling some balances.
“Through cloak and dagger, the Department has thus finalized a rule with a rollout plan that is maximally designed to forgive tens or hundreds of billions of dollars without any judicial review and is designed to boost the incumbent Democratic presidential candidate two months before the election,” the complaint filed on Tuesday read.
The Department did not immediately respond to a request for comment.
Among the main components of the rule is a provision to forgive the full amount of interest borrowers accrued, provided they earn less than $120,000 for single borrowers or $240,000 for married couples and are enrolled in an income-driven repayment plan. Another provision permits a one-time, automatic cancellation of up to $20,000 in accrued interest for borrowers regardless of income.
Borrowers with outstanding undergraduate debt that is at least 20 years old, or graduate debt that is 25 years old, would also see their balances automatically forgiven under the rule. And a smaller number of students who attended schools that closed or whose graduates did not find jobs in meaningful numbers would also see their debt canceled.
Judge J. Randal Hall, a federal judge for the Southern District of Georgia, said in granting the temporary restraining order that the states had established a likelihood that the Education Department had overstepped its authority, and could well prevail in the lawsuit.
“This is especially true in light of the recent rulings across the country striking down similar federal student loan forgiveness plans,” Judge Hall wrote.
Like the temporary injunction placed on the SAVE plan, the order on Thursday prevents the Education Department from forging ahead with its student debt programs only while legal challenges play out in court.
But an energized collective of Republican attorneys general has steadily chipped away at the administration’s debt relief programs, arguing that they harm taxpayers by forcing the government to absorb the cost of outstanding loan and interest balances.
The states that sued to block the rule include Missouri, Georgia, Alabama, Arkansas, Florida, North Dakota and Ohio. Larger coalitions also banded together to challenge the SAVE plan in two separate cases, as well as the Biden administration’s revised Title XI rules.
“This is a HUGE victory for every American who won’t have to pay someone else’s Ivy League debt,” Andrew Bailey, the Missouri attorney general, who has helped lead several challenges, wrote on social media.
The Education Department has repeatedly vowed to keep borrowers informed about the status of its programs on its website as legal challenges mount, leaving borrowers in limbo. While the order on Thursday did not directly affect anyone because the rule has not been finalized, more than eight million people who had enrolled in the SAVE plan await the outcome of that case for clarity on the amount of debt they still owe.
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