A federal judge in Missouri temporarily put President Joe Biden’s latest student loan forgiveness plan on hold, as a separate order in Georgia was lifted.
The original Georgia ruling expired on Oct. 3, allowing Missouri and five other Republican-led states to take immediate action.
Also joining the suit are Alabama, Arkansas, Florida, North Dakota and Ohio.
The states argue that the plan would hurt taxpayers and financially drain local loan providers like Missouri’s MOHELA.
Trump-appointed U.S. District Judge Matthew Schelp issued the order, calling it an easy decision.
So far, Biden has canceled about 9.5 percent of all federal US student loans, which is about $1.6 trillion.
“This is yet another win for the American people,” Missouri Attorney General Andrew Bailey said in a statement. “Courts legally recognize Joe Biden and Kamala Harris cannot employ Americans with Ivy League debt.”
ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
The legal battle began in September when several states filed lawsuits challenging Biden’s authority to enact widespread student loan cancellations.
U.S. District Judge Georgia J. Randal Hall dismissed the state’s case on Thursday, ruling the state lacked legal standing to continue.
The case was later transferred to Missouri, which has a strong claim through the student loan servicer, MOHELA.
MOHELA is paid based on the number of borrowers handled, reasoning that mass cancellations will reduce income. In 2023, they generate $279.2 million in service fees.
First proposed in April 2024, Biden’s plan is designed to provide relief to about 30 million borrowers, eliminating up to $20,000 in student loan debt for some and lowering interest rates for others.
Schelp’s decision ended speculation that the Biden administration could push through the cancellation. For a brief window, it looked like the government would be allowed to move forward, but that opportunity quickly closed.
The Department of Education has vowed to defend the proposal in court.
“This lawsuit is being brought by Republican elected officials who have made it clear that they will stop at nothing to prevent millions of their own constituents from taking out student loans,” a representative from the department said.
ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
Republican senators say there are more challenging loans and expenses Americans incur outside of college.
Commonly cited were mortgages, cars, and medical bills, while Democrats argued that focusing on education costs would provide much-needed relief to working families.
Biden is facing increasing pressure on economic policy, especially ahead of the election.
He told a crowd in Wisconsin last month that he believed the plan would have a “life-changing” impact on America’s college graduates. During the same trip, the president outlined four possible ways to benefit.
Borrowers who owe more than they borrowed could see up to $20,000 automatically written off, with the loan canceled for borrowers who have paid off their undergraduate loans for 20 years or their graduate loans for 25 years.
Loans from low-cost programs with poor financial results, where people earn less than the total amount owed, can be automatically forgiven.
Borrowers eligible for other federal forgiveness programs will have their loans canceled without having to apply, eliminating reservations about the complicated application process.
Those who support the fifth path – a category proposed for those who are in distress – are set to get their wish, as developed by the Department of Education “in the coming months.”
This article includes a report from The Associated Press.
