Federal Judge Halts Biden’s Latest Student Loan Cancellation Plan
A federal judge in Missouri has issued a temporary injunction against President Joe Biden’s most recent student loan cancellation plan, effectively blocking any widespread debt relief. U.S. District Judge Matthew Schelp granted the injunction following a request from six Republican-led states, who argued that the Education Department could potentially cancel up to hundreds of billions of dollars in student loans unlawfully.
This legal action comes after a federal judge in Georgia allowed a previous pause on the plan to expire. The case has since been transferred to Missouri, where Judge J. Randal Hall dismissed Georgia from the lawsuit due to lack of legal standing but recognized Missouri’s right to challenge the plan.
Missouri Attorney General Andrew Bailey praised the court’s decision, stating that it “protects Americans from being burdened with debt.” The state is suing on behalf of MOHELA, a state-created student loan servicer, arguing that loan cancellation would harm the organization’s revenue.
Biden’s plan, which has been on hold since September due to the initial lawsuit, aims to cancel student loan debt for approximately 30 million borrowers. The proposal includes erasing up to $20,000 in interest for borrowers with increasing balances due to interest accumulation and providing relief to those repaying loans for 20-25 years, as well as graduates from high-debt programs.
The plan was developed through a federal rulemaking process after the Supreme Court rejected an earlier proposal. However, the Republican states claim that the Education Department bypassed a typical 60-day waiting period for new federal rules.
The ongoing legal battle involves additional states, including Alabama, Arkansas, Florida, North Dakota, and Ohio. As the case progresses, millions of student loan borrowers await a resolution that could significantly impact their financial futures.