A federal judge in Georgia has temporarily blocked the Biden administration from implementing its latest plan to bring widespread federal student loan cancellation for up to 30 million borrowers.
The 14-day restraining order was handed down Sept. 5, two days after a coalition of seven Republican-led states preemptively sued to stop the plan, claiming that the federal government is “unlawfully trying to mass cancel hundreds of billions of dollars of loans” and planning to do so by Sept. 7.
The plan in question, popularly known as “Plan B,” has been in the works since last summer, when the U.S. Supreme Court struck down the initial effort by the Biden administration to offer a blanket cancellation of up to $400 billion in student loans. It has yet to be published, although borrowers were asked last month to confirm whether they want to opt-out.
According to the U.S. Department of Education, Plan B would primarily benefit those who owe more than they originally borrowed due to accrued interest. It would erase up to $20,000 beyond the principal balance, regardless of the borrower’s income. Some 23 million may even see their entire interest balances eliminated.
The Education Department could also forgive the debt of those who have been repaying for at least 20 or 25 years, those who qualify for loan forgiveness under other programs but haven’t applied, and those who attended schools that lost access to federal aid, suddenly closed, or left graduates financially worse off.
A fifth category of borrowers would get their debt forgiven based on certain “hardships” that persist after other benefits are exhausted, such as medical debt and expensive child care. The specifics are still under review.
The seven-state coalition, led by Missouri Attorney General Andrew Bailey, argued that the Education Department lacks the rule-making authority to cancel debt at such a large scale. It noted that the department’s income-driven loan repayment program, dubbed SAVE, is also halted while an appeals process over its legality plays out.
“This is the third time the Secretary has unlawfully tried to mass cancel hundreds of billions of dollars in loans,” their complaint read.
“Courts stopped him the first two times, when he tried to do so openly. So now he is trying to do so through cloak and dagger.”
Judge J. Randal Hall of the Southern District of Georgia sided with the states. His order paused Plan B pending a Sept. 18 hearing.
“Plaintiffs show a substantial likelihood of success on the merits given the rule’s lack of statutory authority,” the judge wrote.
Bailey welcomed the decision, calling it a “huge victory” for Americans who have already paid off their student loans or didn’t go to college at all.
“I paid for my education in blood, sweat, and tears in service to my country, so this fight is personal for me,” he said in a statement.
“We will continue to lead the way for working Americans who are being preyed upon by unelected federal bureaucrats in Washington D.C.”
The lawsuit is joined by the attorneys general of Alabama, Arkansas, Florida, Georgia, North Dakota, and Ohio.
The Education Department didn’t immediately respond to a request for comment.
