Biden’s student loan forgiveness will be free as court order expires

WASHINGTON — President Joe Biden’s latest attempt to cancel a student loan is free to move forward — at least temporarily — after a Georgia judge ruled that a legal challenge should be handled by a Missouri court.

Biden’s plan has been on hold since September after seven Republican-led states challenged it in federal court in Georgia. But on Wednesday, a federal judge decided not to extend the pause and instead dismissed Georgia from the lawsuit, ruling that it did not have the legal right or standing to sue.

U.S. District Court Judge J. Randal Hall opted to send the complaint back to Missouri, one of the remaining states in the case. On Thursday, those states filed a motion asking the Missouri court to block the project.

Without new obstacles, the Biden administration could push the proposal to the finish line as early as Friday. The Department of Education would be free to finalize a rule paving the way for reversal, although that would likely take days or weeks.

Biden’s plan would cancel at least some student debt for about 30 million borrowers.

This would wipe out up to $20,000 in interest for those who saw their initial balance increase due to spiraling interest. It would also provide relief to those who have been paying off their loans for 20 or 25 years and those who attended college programs that leave graduates with high debt relative to their income.

Biden directed the Department of Education to pursue the reversal through a federal regulatory process after the Supreme Court rejected an earlier plan using a different legal rationale. This plan would have eliminated up to $20,000 for 43 million Americans.

The Supreme Court rejected Biden’s first proposal in a case brought by Republican states, including Missouri, which now takes the lead in the latest lawsuit.

In his order Wednesday, Hall said Georgia failed to prove that it was materially harmed by Biden’s new plan. He rejected the argument that the policy would harm the state’s tax revenue, but said Missouri had “a clear right” to sue.

Missouri is suing on behalf of MOHELA, a student loan servicer created by the state and hired by the federal government to help collect student loans. In the suit, Missouri argues that cancellation would harm MOHELA’s revenue because it is paid based on the number of borrowers served.

In their lawsuit, the Republican states argue that the Department of Education quietly directed loan servicers to prepare for loan forgiveness as early as Sept. 9, bypassing the usual 60-day waiting period for new federal rules come into effect.

The courts are now asking the Missouri court to act quickly, saying the Department of Education could “unlawfully cancel en masse up to hundreds of billions of dollars in student loans as early as Monday.”

Alabama, Arkansas, Florida, North Dakota and Ohio are also joining the lawsuit.

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