Federal Judge Clears Path for Part of Biden’s Student Loan Plan

A federal judge on Wednesday allowed the Biden administration to resume a student debt relief program for more than 27 million borrowers, but the decision could be just a temporary reprieve as the case moves to a different court.

The judge found that Georgia, one of the seven states that challenged the program, lacked standing and could not be the venue for the lawsuit. The ruling allowed final preparations for the loan relief plan — which was expected to go into effect in the fall — to continue for now.

But it also transferred the lawsuit to another federal court in the Eastern District of Missouri, where it may yet succeed in blocking the measure. The program, estimated to cost around $147 billion, is designed to forgive loans for those who accumulated decades of interest or failed to qualify for relief through other channels.

The decision provides a narrow lifeline for one of the few outstanding goals the Biden administration has pursued in its student debt agenda, after several past attempts at mass debt cancellation have been ensnared in litigation and knocked down by the Supreme Court.

A coalition of Republican attorneys general sued the Education Department in September to block the program, arguing that it could scramble states’ tax revenue by forgiving large amounts of debt, as well as harm loan servicers such as Mohela that would be prevented from collecting significant interest balances.

The lawsuit also claimed the department had preemptively directed loan servicers to start making preparations for the program and flagging balances to be canceled, well before the final rule had gone into effect.