Federal judge hands Biden victory as Republicans challenge student loan bailouts

A federal judge on Wednesday thwarted Republican efforts to thwart President Biden’s student loan bailout, allowing the government to press ahead with its debt relief plan weeks before the November election.

U.S. District Judge Randal Hall of Augusta removed Georgia from a lawsuit brought by seven Republican-led states against the Biden administration after finding that the Peach State did not have standing to bring the lawsuit over the loan forgiveness proceedings. The judge said Georgia had failed to show it would be harmed by the administration’s plan to eliminate $73 billion in student loan debt owed by tens of millions of Americans.

The decision came a day before Hall’s temporary restraining order expired on September 5. The judge did not extend the ruling and the Department of Education can now finalize regulations to implement Biden’s plan.

Georgia argued that bailing out student loans would lead to a loss of tax revenue, but Hall, the GOP nominee, disagreed and took the case to a federal court in Missouri.

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“There is no indication that this rule is being implemented to target states or their income taxes, so any loss… of tax revenue is incidental and insufficient to ensure Georgia’s standing,” Hall wrote in his opinion.

A judge previously ruled that Missouri does have standing to bring the lawsuit because the state runs a nonprofit student loan servicer that stands to directly lose millions of dollars under the debt relief plan.

The administration proposed the regulation in April, after previous plans were blocked by courts. As a 2020 candidate, Biden pledged to provide debt relief to millions of Americans who turned to federal student loans to finance their higher education. The draft regulation, according to court filings, would allow the government to fully or partially reduce the debt of an estimated 27.6 million borrowers.

In addition to Georgia and Missouri, Republican attorneys general in Alabama, Arkansas, Florida, North Dakota and Ohio are party to the lawsuit challenging the policy. The states on Friday asked U.S. District Judge Matthew Schelp in Missouri, a Trump appointee, to rule on extending a temporary restraining order blocking the proposal.

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In a statement to Reuters, a Department of Education spokesman praised the judge’s “finding that this case had no legal basis to be brought in Georgia.” A spokesman characterized the GOP-led lawsuit as an attempt “to prevent millions of their constituents from taking a break from their student loans.”

“We will continue our lawful efforts to provide relief to more Americans, including vigorously defending these proposals in court,” the spokesperson added, according to Reuters.

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The Biden administration’s proposal would include bailing out borrowers who owe more than they originally borrowed because of accrued interest; people who have been repaying installments for at least 20 to 25 years, depending on their situation; and borrowers who were eligible for student loan forgiveness under previous programs but who never applied.

The Justice Department argued that because the Department of Education had not yet finalized the rule, the judge had taken no action to investigate the matter. Republican-led states insisted that the Biden administration was preparing to immediately cancel student loan debt as soon as the rule becomes final, before the lawsuits can be challenged in court.

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The White House has said student loan relief is a necessary action to provide relief to millions of debtors burdened by college loans.

Republican critics of the plan say the president does not have the authority to forgive student loan debt without a congressional resolution and suggest the aid is unfair to taxpayers and other borrowers who have already paid off their loans without relief.

Reuters contributed to this report.