A federal judge ruled on Wednesday that the Biden administration can move forward with its student loan forgiveness program, which aims to forgive debt for over 25 million Americans before the end of his term. The ruling was issued by U.S. District Judge Randal Hall, who determined that Georgia was not the proper venue for the case brought by GOP-led states, and it would be more appropriate for the case to be heard in Missouri. Hall’s ruling allows a restraining order on the program to expire, which had prevented the administration from finalizing the rule.
The program targets borrowers with debt that exceeds the amount they initially borrowed, those with loans older than 20 or 25 years, attendees of career-training programs with high debt or low earnings, and those eligible for forgiveness programs but never applied. Additionally, approximately 25 million borrowers could have all of their interest forgiven through the program if they meet certain criteria, such as having up to $20,000 in interest, earning less than $120,000 as a single person, or having a combined income under $240,000 as a married couple enrolled in income-driven payment plans.
The Biden administration estimates that the program will cost $147 billion over the next decade. Seven GOP-led states filed a lawsuit in Georgia, arguing that the administration illegally instructed loan servicers to begin eliminating debt before the rule was finalized. The lawsuit claims that the administration planned to immediately begin forgiving loans once the rule took effect, despite federal law requiring a 60-day buffer period after implementation. Missouri also argued that the state agency administering federal student loans and scholarships would lose revenue under the program.
The Student Borrower Protection Center nonprofit called the legal decision a small victory for democracy and criticized the lawsuit as absurd and dangerous. The organization believes that the program is necessary to provide relief to millions of Americans struggling with unaffordable debt. Legal challenges to the program are expected to continue, as the states have asked a federal court in Missouri to impose an injunction on the program while they pursue the lawsuit further. This student loan forgiveness program is the second iteration of Biden’s plan, after an earlier proposal to forgive up to $20,000 for over 40 million borrowers was struck down by the Supreme Court last year.
