Court Victory Allows Biden’s Student Loan Forgiveness Plan To Proceed

Key Takeaways

• A court ruling in Georgia has cleared the way for President Joe Biden’s latest program to forgive student debt, at least for the time being.
• The case will now be decided by a different federal court in Missouri and could ultimately be decided by the Supreme Court.
• If Biden’s program is allowed to go through, millions of borrowers would have some or all of their federal student loans forgiven.

A legal victory for President Joe Biden’s administration has removed an obstacle standing in the way of student loan forgiveness for millions of borrowers. 

A federal judge in Georgia late Wednesday allowed a temporary block on Biden’s latest student loan forgiveness program to expire. The expiration of the block was a setback for Republican states who filed a lawsuit seeking to prevent the $147 billion program from going into effect.

Missouri and seven other states had sued to stop Biden’s second attempt at student loan forgiveness, arguing the new rules are unconstitutional. Judge J. Randal Hall in early September temporarily blocked the program while the case was considered, but ruled on Thursday that the case must be heard in Missouri, not Georgia, because the state of Georgia did not have legal standing to sue.

What Does This Student Loan Forgiveness Plan Include?

Biden’s Department of Education created the latest debt forgiveness program after the Supreme Court struck down an earlier attempt that would have wiped out up to $20,000 of student loan debt per borrower.

The latest iteration was scheduled to go into effect as early as this month before it was blocked. The program would forgive some or all of the federal student loan debts for people in certain situations, including those whose debts grew because of interest, borrowers with decades-old debts, and those who qualify for existing debt relief programs but haven’t applied, among others.

If it survives court challenges, the program will bring the total number of people who have received some amount of student loan forgiveness to 30 million. About 4 million borrowers have already had their loans forgiven under other Biden programs, the department said.

“While we appreciate the District Court’s acknowledgment that this case has no legal basis to be brought in Georgia, the fact remains that this lawsuit reflects an ongoing effort by Republican elected officials who want to prevent millions of their own constituents from getting breathing room on their student loans,” an Education Department spokesperson said via email. “ We will continue our lawful efforts to deliver relief to more Americans, including by vigorously defending these proposals in court.”

More Legal Challenges Are Ahead

The fate of the program could ultimately be determined by the same Supreme Court that struck down Biden’s earlier attempt at forgiveness.

In that case, the court’s conservative majority ruled that Biden had overstepped his authority as president when discharging the loans, siding with Missouri and other Republican-led states that had sued to block forgiveness. The new program, however, uses a different bureaucratic procedure based on a different law—the Education Act of 1965—which the Department of Education says is constitutional. 

The loan forgiveness program is just one of Biden’s student loan-related programs currently tied up in court. Republican lawsuits have also blocked the SAVE repayment plan, a lower-cost loan repayment plan Biden rolled out last year, enrolling 8 million borrowers. Those borrowers’ loans are in interest-free forbearance until the legal battle is resolved.

Read the original article on Investopedia.