A federal judge in Missouri has put a temporary hold on President Joe Biden’s student loan cancellation plan, blocking any widespread loan forgiveness. The injunction was granted after six Republican-led states requested it, stating the Education Department could potentially cancel hundreds of billions of dollars in student loans. The Education Department has vowed to defend its proposal in court, calling the lawsuit brought by Republican officials an attempt to prevent their constituents from getting relief on their student loans.
Biden’s student loan cancellation plan has been on hold since September when states filed a lawsuit in Georgia, arguing that Biden had exceeded his legal authority. While it appeared the plan might move forward after another judge in Georgia decided not to extend the pause, U.S. District Judge Matthew Schelp in Missouri granted an injunction blocking any widespread cancellation. Proponents of loan forgiveness briefly had hope the plan would move forward, but Schelp’s order put that question to rest, stating that it was an easy decision to block the plan.
Biden’s plan aims to cancel at least some student loan debt for an estimated 30 million borrowers, erasing up to $20,000 in interest for those who have seen their original balances increase due to interest. It also provides relief to those who have been repaying their loans for 20 or 25 years, as well as graduates from college programs with high debt compared to their incomes. Biden instructed the Education Department to pursue cancellation through a federal rulemaking process after the Supreme Court rejected an earlier plan. The new plan would have eliminated up to $20,000 for 43 million Americans.
The states involved in the lawsuit, led by Missouri Attorney General Andrew Bailey and including Alabama, Arkansas, Florida, North Dakota, and Ohio, argue that the Education Department had instructed loan servicers to prepare for loan cancellation, bypassing the typical 60-day waiting period for new federal rules to take effect. Missouri is specifically suing on behalf of MOHELA, a student loan servicer created by the state, arguing that cancellation would harm its revenue as it is paid based on the number of borrowers it serves. U.S. District Court Judge J. Randal Hall dismissed Georgia from the case and transferred it to Missouri, which he believes has a stronger case to challenge Biden’s plan.
The Education Department intends to defend its proposal in court and continues to push for student loan cancellation. Biden’s plan faces legal challenges from Republican-led states who argue that the policy would have negative implications for the state’s revenue. Despite the temporary hold on the plan, the Biden administration remains committed to providing relief for borrowers struggling with student loan debt. The outcome of the legal battle over student loan cancellation remains uncertain, with various states and the federal government at odds over the proposed relief measures.
