Just two days after seven states sued to block the Biden administration’s new effort to relieve debt for nearly 28 million student loan borrowers, a federal judge in Georgia issued a temporary restraining order, putting the plan on hold for 14 days.
The Education Department proposed regulations in April that would provide either full or partial debt cancellation for borrowers who fall into discrete categories. The groups include people who owe more than they initially borrowed as a result of accrued interest, along with those who have been repaying loans for more than 20 years. The regulations have not been finalized—the last step in the federal rule-making process before the department can carry out its plans.
Fearing that the department was going to issue the final regulations this week and then immediately cancel some borrowers’ loans, the states filed the lawsuit to pre-empt any action, arguing that the proposed plan was unlawful.
Judge J. Randal Hall of the Southern District of Georgia didn’t consider the merits of the states’ claims but found that their lawsuit was likely to succeed “given the rule’s lack of statutory authority, and the [Education] Secretary’s attempt to implement a rule contrary to normal procedures. This is especially true in light of the recent rulings across the country striking down similar federal student loan forgiveness plans.”
Under the order, the department can’t cancel student loans, forgive any interest or implement any other actions whenever the rule is finalized. The judge also prevented the department from instructing federal contractors to take such actions. He scheduled a hearing on the issue for Sept. 18.
