Federal judge halts Biden’s new debt relief plan

Just two days after seven states sued the Biden administration seeking to block new action to forgive the debts of nearly 28 million student loan borrowers, a federal judge in Georgia issued a temporary injunction halting the plan for 14 days.

The Education Department proposed legislation in April that would provide full or partial debt relief to borrowers who fall into distinct categories. Those groups include people who owe more than they originally borrowed due to accrued interest, as well as people who have been repaying loans for more than 20 years. The legislation has not been finalized — the last step in the federal rulemaking process before the department can move forward with its plans.

Fearing that the department would issue final regulations this week and then immediately cancel some borrowers’ loans, the states filed a lawsuit to preempt any action, arguing that the proposed plan is unlawful.

Judge J. Randal Hall of the Southern District of Georgia did not weigh in on the merits of the states’ claims but said their lawsuit would likely succeed “given the lack of statutory force of the provision and the Secretary (of Education)’s attempt to implement a provision that is contrary to normal procedures. This is especially true in light of recent rulings across the country invalidating similar federal student loan forgiveness plans.”

Under the order, the department cannot cancel student loans, forgive interest or implement any other actions once the rule is finalized. The judge also blocked the department from ordering federal contractors to take such actions. He scheduled a hearing in the case for Sept. 18.