(Reuters) -A U.S. judge on Thursday temporarily blocked President Joe Biden’s administration from implementing its latest student debt forgiveness plan, just days after seven Republican-led states filed a lawsuit seeking to halt it.
U.S. District Judge J. Randal Hall in Augusta, Georgia, said the states had established a likelihood of proving the Education Department lacked authority to cancel student loans under the plan, which the states alleged it was on the verge of doing.
“This is especially true in light of the recent rulings across the country striking down similar federal student loan forgiveness plans,” Hall, an appointee of Republican former President George W. Bush, wrote.
Hall issued a temporary restraining order after Republican state attorneys general sued on Tuesday over a rule the Education Department proposed in April that would allow it to provide full or partial debt relief to certain types of borrowers.
The rule, which according to court papers would affect an estimated 27.6 million borrowers, has yet to be finalized.
But the state attorneys general said they had obtained documents showing the department had instructed federal loan servicers to begin canceling loans under the policy as soon as this week, potentially resulting in what they said would be the unlawful forgiveness of $73 billion in debt overnight.
The states, led by Missouri, said the Education Department has no authority to carry out such debt forgiveness. The administration has estimated the cost of the policy at $146.9 billion, while the states peg the cost in the hundreds of billions of dollars.
Hall said he decided to “hastily” issue the order pausing the policy pending a Sept. 18 hearing in order to preserve the status quo.
The White House said in a statement it strongly disagreed with the ruling, calling it “an overreach based on false claims fueled by Republican elected officials.”
Republicans object to the cost of debt forgiveness and argue it is unfair to make some taxpayers cover the expense of other peoples’ college educations.
“Today is a huge victory for every working American who won’t have to foot the bill for someone else’s Ivy League debt,” Missouri Attorney General Andrew Bailey, a Republican, said in a statement.
An Education Department spokesperson said it was reviewing the ruling, adding the draft rule at issue would not be implemented until it was finalized.
“The department is committed to supporting borrowers and fighting for relief for those who qualify,” the spokesperson said.
The lawsuit is the latest legal challenge to the Democratic president’s efforts to fulfill a campaign pledge and bring debt relief to millions of Americans who turned to federal student loans to fund their costly higher education.
The department under Biden has already approved $169 billion in debt relief for nearly 4.8 million people.
Republican-led states successfully convinced the 6-3 conservative majority U.S. Supreme Court in June 2023 to block a $430 billion program championed by Biden that would have canceled up to $20,000 in debt per borrower for up to 43 million Americans.
The administration then pursued a different program dubbed the Saving on a Valuable Education, or SAVE, plan, that was designed to lower monthly payments for millions of borrowers and speed up loan forgiveness for some.
But Republican-led states convinced a federal appeals court to block that plan while litigation over it continues to play out. The Supreme Court on Aug. 28 declined to lift that injunction.
Source: Economy - investing.com
