Federal judge hands Biden victory as Republicans challenge student loan bailout

A federal judge on Wednesday defeated Republican efforts to thwart President Biden’s student loan bailout plan, allowing the government to continue its debt forgiveness plan weeks before the November election.

U.S. District Judge Randal Hall in Augusta removed Georgia from a lawsuit filed by seven Republican-led states against the Biden administration after determining the Peach State lacked standing to file suit in justice regarding the action for loan cancellation. The judge said Georgia failed to demonstrate that the administration’s plan to eliminate $73 billion in student debt held by tens of millions of Americans would harm it.

The ruling came a day before a temporary restraining order Hall issued on September 5 expired. The judge did not extend the order, and the Department of Education is now authorized to finalize regulations to implement Biden’s plan.

Georgia had argued that the student loan bailout would result in lost tax revenue, but Hall, a Republican appointee, disagreed and moved the case to federal court in Missouri.

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“There is no indication that the rule is being implemented to attack states or their income taxes, so any loss of… tax revenue is incidental and insufficient to give Georgia a reputation,” Hall wrote in his notice.

The judge previously ruled that Missouri had standing to sue because the state operates a nonprofit student loan servicer that stands to directly lose millions of dollars in funding under the plan. debt cancellation.

The administration proposed the regulations in April after previous plans were blocked by the courts. Biden, as a candidate in 2020, pledged to provide debt relief for the millions of Americans who turned to federal student loans to finance their higher education. The proposed settlement, according to court documents, would allow the government to provide full or partial debt relief to approximately 27.6 million borrowers.

In addition to Georgia and Missouri, the Republican attorneys general of Alabama, Arkansas, Florida, North Dakota and Ohio are parties to the lawsuit challenging the policy. The states asked U.S. District Judge Matthew Schelp of Missouri, a Trump appointee, on Friday to rule on whether to extend the temporary restraining order blocking the proposal.

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An Education Department spokesperson welcomed the judge’s “recognition that this case has no legal basis to be brought in Georgia,” in a statement to Reuters. The spokesperson called the GOP-led lawsuit an attempt “to prevent millions of their own constituents from getting relief from their student loans.”

“We will continue our legal efforts to provide relief to more Americans, including vigorously defending these proposals in court,” the spokesperson added, according to Reuters.

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The Biden administration’s proposal would bail out borrowers who owe more than they originally borrowed due to accrued interest; people who have been repaying for at least 20 to 25 years, depending on their situation; and borrowers who were eligible for student loan forgiveness under previous programs but never applied for it.

The Justice Department had argued that because the Education Department had not yet finalized the rule, there was no agency action for the judge to review in this case. Republican-led states have insisted that the Biden administration is preparing to immediately cancel student debt once the rule becomes final, before the action can be challenged in court.

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The White House said its student loan rescue plan was a necessary measure to provide relief to millions of debtors burdened by loans they took out to pursue higher education.

Republican critics of the plan said the president did not have the authority to cancel student debt without an act of Congress and suggested the bailout was unfair to taxpayers and other borrowers who have already paid off their loans without relief.

Reuters contributed to this report.