Get updates delivered to you daily. Free and customizable.
Business Insider
A federal court just dealt a blow to 30 million student-loan borrowers by blocking Biden from carrying out his 2nd try at broad debt cancellation
By Ayelet Sheffey,
1 day ago
A federal court temporarily blocked President Joe Biden's second try at broader student-loan forgiveness.
Anna Moneymaker/Getty Images
A federal court temporarily blocked Biden's second attempt at broader student-debt relief.
It came two days after a group of GOP-led states filed a lawsuit to block the forgiveness.
The administration had planned to begin implementing the relief in October.
The legal setbacks keep coming for millions of federal-student-loan borrowers.
On Thursday, the US District Court for the Southern District of Georgia placed a temporary restraining order on President Joe Biden's second try at broader student-loan forgiveness , which would involve the Higher Education Act of 1965.
This order came just two days after seven GOP state attorneys general filed a lawsuit to block the new relief plan before it was even finalized. They argued in their lawsuit that the Biden administration was violating regulatory procedure by making plans to implement the forgiveness ahead of schedule.
Internal documents obtained by the states and attached alongside the lawsuit show an Education Department memo to the servicer MOHELA saying, "In September of 2024, the Biden-Harris Administration will launch the Federal Student Loan Debt Initiative."
The six-page order said that Biden was "temporarily restrained from implementing the Third Mass Cancellation Rule" and that the administration was additionally restrained "from mass canceling student loans, forgiving any principal or interest, not charging borrowers accrued interest, or further implementing any other actions under the Rule or instructing federal contractors to take such actions."
To obtain a temporary restraining order, the ruling said, states had to show how they would suffer harm from the challenged policy. The ruling said that the GOP-led states satisfied that requirement because of their arguments that the relief would harm the revenues of the student-loan company MOHELA, an instrument of the state of Missouri, one of the states that joined the lawsuit.
An Education Department spokesperson told Business Insider that the department was "reviewing the ruling from a federal court." The spokesperson added: "The Department has been following the negotiated rulemaking process to draft the rules that would provide this relief, and they will not be implemented until after they are finalized."
The plan was set to go into effect in October . Given this ruling, the timeline is now unclear for when or if relief will reach over 30 million borrowers as the legal process progresses.
Some Republican lawmakers lauded Thursday's court decision. Sen. Bill Cassidy, the top Republican on the Senate education committee, wrote on X: "The admin knows they lack the legal authority for this, but this is their attempt to buy votes."
Many of Biden's key student-debt-relief policies have faced legal challenges. Last summer, the Supreme Court struck down Biden's first attempt at broad debt relief. More recently, a federal court blocked the Education Department from implementing Biden's new SAVE income-driven repayment plan , intended to give borrowers lower monthly payments and a shorter timeline to debt relief.
These legal challenges have left millions of borrowers in limbo , with uncertainty as they wait for a final court decision on the future of their student-loan payments and any relief they may receive.
Get updates delivered to you daily. Free and customizable.
It’s essential to note our commitment to transparency:
Our Terms of Use acknowledge that our services may not always be error-free, and our Community Standards emphasize our discretion in enforcing policies. As a platform hosting over 100,000 pieces of content published daily, we cannot pre-vet content, but we strive to foster a dynamic environment for free expression and robust discourse through safety guardrails of human and AI moderation.
Comments / 0