Student Loan Update: 27.6 Million Borrowers Get Good News

Around 27.6 million student loan borrowers could benefit as a federal judge ruled to remove Georgia from the lawsuit against President Joe Biden’s student debt forgiveness plan.

Georgia-based US District Judge J. Randal Hall made the decision Wednesday. On Thursday, the temporary restraining order blocking the Biden administration from moving forward with its SAVE forgiveness plan expired.

The state of Georgia was leading the lawsuit along with Missouri, but Hall said there was no evidence that Georgia would be harmed by the federal government’s move to forgive roughly $73 billion in student loan debt.

Now, only Alabama, Arkansas, Florida, Missouri, North Dakota and Ohio will be compensated. And, due to Georgia’s lack of legal standing, litigation for the case will be moved to Missouri.

Georgia originally thought that it would face tax revenue losses and thus had a legal right to challenge Biden’s Education Department.

“There is no indication that the rule is being implemented to attack the states or their income taxes, so any loss of … tax revenue is incidental and insufficient to create standing for Georgia,” Hall wrote.

However, Hall did rule that Missouri has reason to sue since the state operates a nonprofit student loan servicer, Missouri Higher Education Loan Authority (MOHELA). That servicer could potentially lose millions of dollars based on Biden’s forgiveness plan.

Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, said Hall’s decision was a “ray of hope” for the borrowers who qualify for forgiveness.

“It’s a huge win for student loan borrowers who qualify for the forgiveness terms of the Biden administration outlined,” Beene told Newsweek.

“The temporary suspension of the loan forgiveness program was an attempt to halt further forgiveness efforts under the grounds of them being financially detrimental to certain states. With that suspension not extended, for the time being, the forgiveness initiative can resume, although the odds are high we’ll continue to see legal challenges to these efforts in the coming months.”

Biden previously saw his first student debt forgiveness plan blocked by the Supreme Court, so his administration created a new attempt to provide full and partial loan forgiveness for 27.6 million Americans.

The specific student loan forgiveness plan in question calls for debt relief to those who now owe more than they first borrowed due to interest as well as those who have made payments for at least 20 or 25 years in some circumstances.

Borrowers who were eligible for forgiveness under past programs but never applied also could get their debt erased.

The states that filed the lawsuit allege the forgiveness plan overreaches the federal government’s authority and unfairly benefits those who attended college over those who didn’t.

“While we appreciate the District Court’s acknowledgment that this case has no legal basis to be brought in Georgia, the fact remains that this lawsuit reflects an ongoing effort by Republican elected officials who want to prevent millions of their own constituents from getting breathing room on their student loans,” a spokesperson for the Department of Education told Newsweek.

“The draft rules would bring the total number of borrowers eligible for student debt relief under the Biden-Harris Administration to over 30 million people. We will continue our lawful efforts to deliver relief to more Americans, including by vigorously defending these proposals in court.” We will not stop fighting to fix the broken student loan system and provide support and relief to borrowers across the country.”

Update 10/03/24 4:28 pm ET: This article was updated with comment from the Department of Education.