Biden’s student loan forgiveness on hold again after day of legal whiplash

WASHINGTON — A federal judge in Missouri on Thursday suspended President Joe Biden’s latest student loan forgiveness plan, slamming the door on hopes it would move forward after another judge allowed a pause to expire .

While it briefly appeared that the Biden administration would have a window to move forward with its plan, U.S. District Judge Matthew Schelp of Missouri granted an injunction blocking any widespread reversal.

Six Republican-led states had requested the injunction hours earlier, after a federal judge in Georgia ruled not to extend a separate order blocking the plan.

The states, led by Missouri’s attorney general, called on Schelp to act quickly, saying the Department of Education could “illegally mass cancel up to hundreds of billions of dollars in student loans as early as Monday.” Schelp called it an easy decision.

Biden’s plan has been on hold since September, when states filed a lawsuit in Georgia, arguing that Biden had exceeded his legal authority. But on Thursday, U.S. District Court Judge J. Randal Hall decided not to extend the pause after finding that Georgia did not have the legal right to sue in the case.

Hall removed Georgia from the case and moved it to Missouri, which Hall said has “a clear position” to challenge Biden’s plan.

Supporters of student loan forgiveness briefly had a glimmer of hope that the plan would move forward — Hall’s order was set to expire after Thursday, allowing the Department of Education to finalize the rule. But Schelp’s order put the issue aside.

“This is another victory for the American people,” Missouri Attorney General Andrew Bailey said in a statement. “The Court rightly recognized that Joe Biden and Kamala Harris cannot saddle American workers with Ivy League debt.”

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.

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 hurt the state’s tax revenue, but he said Missouri had a strong case.

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.

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