District Court Rules Biden Administration Is 'Temporarily Restrained' From Implementing Student Loan Forgiveness Plan
By Maria Carrasco, NASFAA Staff Reporter
Seven Republican-led states on Tuesday filed a lawsuit against the Biden administration aiming to block the Department of Education (ED) from implementing its student loan debt relief plan, whose rules have not yet been finalized. Less than 48 hours later, a U.S. District Court issued a temporary restraining order blocking ED from implementing its draft rules which were released in April for public comment.
The lawsuit, led by Missouri Attorney General Andrew Bailey, claimed that ED is “unlawfully trying to mass cancel hundreds of billions of dollars of loans” and has “quietly” instructed federal contractors to “immediately” begin cancellation of certain student loans as early as September 3, or possibly beginning on September 7.
Further, the seven states – Missouri, Georgia, Alabama, Arkansas, Florida, North Dakota and Ohio – alleged that ED has “finalized a rule with a rollout plan that is maximally designed to forgive tens or hundreds of billions of dollars.”
“Our latest lawsuit challenges their third and weakest attempt to mass-cancel student loans in the dark of night without letting Congress – or the public – know about it.” Bailey said in a statement. “That’s illegal. We successfully halted their first two illegal student loan cancellation schemes; I have no doubt we will secure yet another win to block the third one.”
Back in April, ED published its first set of draft rules, done through the negotiated rulemaking process, to provide targeted student debt relief to borrowers. According to the Office of Information and Regulatory Affairs, ED plans on these draft rules to be finalized in October this year.
The draft rules however did not include the issue of “hardship,” which the negotiated rulemaking committee reached consensus on in February 2024. In April, ED said it would publish another draft rule focused on providing relief for borrowers experiencing “hardship” in the coming months.
ED initiated the rulemaking process after the U.S. Supreme Court struck down the Biden administration's initial student debt relief plan, issued through executive action, to cancel up to $20,000 of student debt for a wide swath of borrowers in the summer of 2023.
On Thursday, the U.S. District Court for the Southern District of Georgia Brunswick Division issued a temporary restraining order against ED from implementing its student loan debt relief plan. The court also ruled ED is barred from mass canceling student loans, forgiving any principal or interest, not charging borrowers accrued interest, or further implementing any other actions under the draft rules or instructing federal contractors to take such actions.
The court scheduled a hearing between ED and the seven states on September 18 over the lawsuit.
“This is a huge victory for every American who won’t have to pay someone else’s Ivy League debt,” Bailey wrote on X.
Sen. Bill Cassidy (R-La.), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, responded to Thursday’s news and said ED lacks the legal authority to carry out this new program.
“Make no mistake, the Biden-Harris loan schemes don’t ‘forgive’ debt,” Cassidy wrote on X. “They transfer it from those who willingly took it on to Americans who decided to forgo college or paid their loans.”
Stay tuned to Today’s News for more updates on this lawsuit.
Publication Date: 9/6/2024
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