A federal judge in Georgia granted a temporary injunction on Thursday to block President Biden’s latest student debt relief plan, which would grant millions of borrowers some forgiveness in runaway interest and decades-long repayment. The ruling was the latest setback for the administration’s attempts to tackle the student debt crisis.
The blocked student debt relief plan
Biden’s plan would have gone into place this fall, offering relief to as many as 27 million borrowers in two key ways. Included is the cancellation of up to $20,000 in interest for those owing more than they initially borrowed, regardless of their income. It would have aided low- and middle-income borrowers who are currently on IDR plans, including single borrowers earning $120,000 or less and married couples earning $240,000 or less.
Full loan forgiveness for those who have been paying off loans for at least two decades. More than 2.5 million borrowers have had student loans for twenty years or longer and still carry debt from loans long ago. It was intended to add to what the Biden administration had been doing already through its various moves, it has approved $168.5 billion in student loan relief for 4.8 million borrowers, which include public servants, people with disabilities, and those who attended for-profit colleges that have gone out of business.
The legal challenge and ruling
That ruling came in response to a lawsuit filed earlier in the week by a group of seven Republican-led states including Georgia and Missouri. The states contended that DOE did not have the authority to wipe out student loans, adding that the administration had begun taking steps to start cancelling hundreds of billions of dollars in loans before the rule was finalized.
U.S. District Judge J. Randal Hall granted the request and ruled that plaintiffs had established likelihood of success on the merits, given that DOE had allegedly acted without statutory authority of the HEROES Act. The temporary injunction broadly enjoins officials from taking any action to carry out or to instruct federal contractors to carry out the debt relief plan.
Impact on borrowers
It leaves millions of borrowers in limbo, with uncertain futures for their student debt relief. A much-needed lifeline to people burdened by student loans-mostly long-term payees whose payment is stretched over decades, with only the growth in the balance due to interest-would have come from this blocked plan.
This decision comes at the heels of another setback in court for the Biden administration with its student debt relief efforts. This past June 2023, the Supreme Court blocked a prior plan that would have wiped out as much as $20,000 per borrower.
Continuation of the legal battles
The decision is the latest to contribute to a chaotic outlook on the administration’s plans for student debt relief. The case could head next to the Supreme Court, which once already has weighed in on the issue. The Biden administration has argued that it has the legal authority to grant debt relief under the Higher Education Act of 1965, which created the federal student loan program. But opponents say this is a decision for Congress to make.
The current ruling to block Biden’s new student debt relief plan represents a major blow to the administration’s efforts in tackling the crisis of student debt. Millions of borrowers are to be affected by this decision, including those who have paid back their loans for decades and watched their balances grow due to interest.
