A federal judge on Wednesday allowed the Biden administration to resume a student debt relief program for more than 27 million borrowers, but the decision could be just a temporary reprieve as the case moves to a different court.
The judge found that Georgia, one of the seven states that challenged the program, lacked standing and could not be the venue for the lawsuit. The ruling allowed final preparations for the loan relief plan — which was expected to go into effect in the fall — to continue for now.
But it also transferred the lawsuit to another federal court in the Eastern District of Missouri, where it may yet succeed in blocking the measure. The program, estimated to cost around $147 billion, is designed to forgive loans for those who accumulated decades of interest or failed to qualify for relief through other channels.
The decision provides a narrow lifeline for one of the few outstanding goals the Biden administration has pursued in its student debt agenda, after several past attempts at mass debt cancellation have been ensnared in litigation and knocked down by the Supreme Court.
A coalition of Republican attorneys general sued the Education Department in September to block the program, arguing that it could scramble states’ tax revenue by forgiving large amounts of debt, as well as harm loan servicers such as Mohela that would be prevented from collecting significant interest balances.
The lawsuit also claimed the department had preemptively directed loan servicers to start making preparations for the program and flagging balances to be canceled, well before the final rule had gone into effect.
Those claims initially convinced J. Randal Hall, a district court judge for the Southern District of Georgia, to grant a temporary restraining order last month blocking it.
But in the order on Wednesday evening, Judge Hall wrote that there was little indication that Georgia would face significant harm under the policy, and also questioned the decision to bring the lawsuit in Georgia while the major servicer it named, Mohela, is based in Missouri.
“Georgia fails to allege the rule is implemented to attack states or their tax policies,” Judge Hall wrote in the order. “Instead, Plaintiffs allege the rule’s purpose is to forgive or cancel hundreds of billions of dollars in student loans.”
“Thus, there is no indication that the rule is being implemented to attack the states or their income taxes, so any loss of revenue that may result from loss of tax revenue is incidental and insufficient to create standing for Georgia,” he wrote.
Both the Education Department and a number of student advocacy groups have characterized the lawsuit as a politically motivated attempt to further cripple the Biden administration’s student debt relief plans.
“This case by the Missouri A.G. is as absurd as it is dangerous,” Persis Yu, the deputy executive director of the Student Borrower Protection Center, said in a statement.
“The decision to file this case in the Brunswick Division of the Southern District of Georgia — a carefully chosen court with a single Republican-appointed judge — was a clear and desperate move to undermine democracy and stack the odds against working families,” she said.
Karine Jean-Pierre, the White House press secretary, declined to comment on the case on Thursday while litigation continues.
“While we appreciate the District Court’s acknowledgment that this case has no legal basis to be brought in Georgia, the fact remains that this lawsuit reflects an ongoing effort by Republican elected officials who want to prevent millions of their own constituents from getting breathing room on their student loans,” a spokesman for the department said in a statement.
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