US Judge Deals Setback to Republican Lawsuit Against Biden’s Student Debt Relief, Reports Reuters

By Daniel Wiessner and Nate Raymond

A federal judge has put a damper on a legal challenge from seven Republican-led states regarding the Biden administration’s latest student debt forgiveness plan. The judge has removed Georgia from the lawsuit and transferred the case to Missouri.

U.S. District Judge J. Randal Hall, based in Augusta, Georgia, made this ruling on Wednesday, just before a temporary restraining order he put in place on September 5 — which prevented the administration from moving forward with its plan — was set to expire.

In his ruling, Hall determined that Georgia, which had partnered with Missouri in filing the lawsuit, failed to demonstrate that it would be adversely affected by the proposed forgiveness of $73 billion in student loan debt for millions of Americans.

The judge concluded that Georgia lacked legal standing to participate in the case, despite the state’s claims of potential tax revenue losses. He then transferred the lawsuit to federal court in Missouri.

"There is no indication that the rule is being implemented to target the states or their income taxes, so any loss of … tax revenue is incidental and insufficient to create standing for Georgia," Hall explained.

Previously, Hall had affirmed that Missouri did possess standing to sue because the state operates a nonprofit student loan servicer that would directly face significant funding losses under the debt forgiveness plan.

The administration presented this regulation in April after earlier plans were thwarted by court rulings. Biden, during his 2020 campaign, pledged to provide debt relief to millions of Americans who relied on federal student loans for their expensive higher education. The proposed regulation aims to allow the government to grant full or partial debt relief to around 27.6 million borrowers.

On Thursday, the states challenging the policy asked a federal judge in Missouri to make a ruling by Friday on whether to continue the injunction against the proposal. The case has been assigned to U.S. District Judge Matthew Schelp, who was appointed by former Republican President Donald Trump.

A spokesperson for the Department of Education expressed appreciation for the judge’s recognition of the lack of legal grounds for the case to be pursued in Georgia. The spokesperson remarked that the lawsuit reflects efforts by Republican state officials to inhibit their constituents from receiving relief on their student loans.

"We will continue our lawful efforts to deliver relief to more Americans, including by vigorously defending these proposals in court," the spokesperson stated.

The attorneys general offices in Georgia and Missouri did not respond to requests for comments on the matter.

Under the draft regulation, debt relief would be available to individuals who owe more than they initially borrowed due to accrued interest, those who have been repaying loans for at least 20 to 25 years depending on their circumstances, and borrowers who qualified for forgiveness under prior programs but did not apply.

The U.S. Justice Department argued that since the rule is not finalized, there is no conclusive agency action for the judge to assess at this time. The states contended that the administration was preparing to cancel loans immediately once the rule is finalized, preventing any opportunity for legal challenges prior.

The White House has characterized the current student loan system as flawed, asserting that debt relief is essential to prevent borrowers from being financially overwhelmed due to their pursuit of higher education. Republicans, however, argue that the Democratic president’s approach to student loan forgiveness constitutes an excessive exercise of authority and an inequitable advantage for college-educated borrowers, while others do not receive similar aid.