Judge immediately halts Biden student debt plan after it was allowed to proceed

A federal judge in Missouri temporarily blocked one Biden administration plan to cancel student debt less than a day after another judge allowed the case, throwing a.’s fate into uncertainty program This could impact more than 27 million borrowers.

The decision, made late Thursday, hampered the administration’s efforts to complete the program before President Biden leaves office in January and was the latest roadblock in his faltering efforts to fulfill a campaign promise to provide student loan relief. Legal issues have held up several programs, and the one that was halted Thursday has now been canceled twice.

The program would, among other things, forgive up to $20,000 in accrued interest on the loans and forgive outstanding balances for borrowers who started paying back their loans decades ago. It is the largest part of the president’s multi-pronged effort to offer broad student debt forgiveness after the Supreme Court rejected his first plan.

A coalition of seven Republican states filed a lawsuit last month to block the plan, arguing that the Department of Education rushed to lay the groundwork for the program before it was completed and that the debt forgiveness it proposed could financially harm states and federal loan servicers. J. Randal Hall, judge of the U.S. District Court for the Southern District of Georgia, temporarily blocked it a month ago. He then released the judgment Wednesday before transferring the case to what he said was the most appropriate location in Missouri.

In a stump order on ThursdayJudge Matthew T. Schelp of the U.S. District Court for the Eastern District of Missouri wrote that the states would likely succeed in challenging the program as unlawful. To make his case, he cited a July decision by the U.S. Court of Appeals for the Eighth Circuit to block the SAVE program, the administration’s other major student debt plan.

Allowing the freeze on the program to expire now, Judge Schelp reasoned, could open the door for the Department of Education to forgive significant amounts of debt that could later be difficult to collect if the courts found the program illegal. find. So he put the handle back in place.

Referring to the Department of Education, the defendant in the case, Judge Schelp wrote: “If Defendants could forgive the student loan debt at issue here, this court, the United States Court of Appeals, and the Supreme Court would be restrained from to assess this case properly. back-end, allowing defendants’ actions to escape review.”

In a statement, the Department of Education criticized the ruling and the lawsuit, which it said was “brought by Republican elected officials who have made it clear they will stop at nothing to prevent millions of their own constituents from gaining breathing room on their student loans.”

Other critics of the lawsuit called the decision a politically motivated advance on a program whose details are still being worked out.

“With a lack of legal arguments, today’s decision takes the extraordinary step of blocking a proposed federal student debt relief rule that has yet to be finalized and has never been implemented,” said Persis Yu, deputy executive director of the Student Borrower Protection Center. said in one statement. “This case is not serious, and this judge’s order puts our jailed courts squarely in the spotlight.”

On Wednesday evening, Judge Hall in Georgia ruled that the state had not shown that he would suffer harm from the program and that he could not be a party to the lawsuit.

But the ruling moved the case into friendlier territory in Missouri, where the state’s attorney general, Andrew Bailey, has scored major victories over the Biden administration’s student debt agenda by claiming that this would be the Missouri Higher Education Loan Authority, called MOHELA, could directly harm. the quasi-independent servicer of student loans in his state.

“This is a huge victory for transparency and the rule of law, and for every American not having to foot the bill for someone else’s Ivy League debt,” Bailey said. wrote on social media.