Biden's student loan cancellation free to move forward as court order expires

President Joe Biden’s latest attempt at student loan cancellation is free to move ahead — at least temporarily — after a judge in Georgia decided that a legal challenge should be handled by a court in Missouri.

Biden’s plan has been on hold since September after seven Republican-led states challenged it in federal court in Georgia. But on Wednesday, a federal judge decided not to extend the pause and instead dismissed Georgia from the lawsuit, finding that it lacked the legal right, or standing, to sue.

U.S. District Court Judge J. Randal Hall opted to send the suit to Missouri, one of the remaining states in the case. On Thursday, those states filed a request asking the Missouri court to block the plan.

Without a new obstacle, the Biden administration could push the proposal toward the finish line as soon as Friday. The Education Department would be free to finalize a rule paving the way for cancellation, though it would likely take days or weeks to carry out.

Biden’s plan would cancel at least some student loan debt for an estimated 30 million borrowers.

It would erase up to $20,000 in interest for those who have seen their original balances increase because of runaway interest. It would also provide relief to those who have been repaying their loans for 20 or 25 years, and those who went to college programs that leave graduates with high debt compared to their incomes.

Biden told the Education Department to pursue cancellation through a federal rulemaking process after the Supreme Court rejected an earlier plan using a different legal justification. That plan would have eliminated up to $20,000 for 43 million Americans.

The Supreme Court rejected Biden’s first proposal in a case brought by Republican states including Missouri, which now takes the lead in the latest lawsuit.

In his order Wednesday, Hall said Georgia failed to prove it was significantly harmed by Biden’s new plan. He rejected an argument that the policy would hurt the state’s income tax revenue, but he found that Missouri has “clear standing” to sue.

Missouri is suing on behalf of MOHELA, a student loan servicer that was created by the state and is hired by the federal government to help collect student loans. In the suit, Missouri argues that cancellation would hurt MOHELA's revenue because it's paid based on the number of borrowers it serves.

In their lawsuit, the Republican states argue that the Education Department had quietly been telling loan servicers to prepare for loan cancellation as early as Sept. 9, bypassing a typical 60-day waiting period for new federal rules to take effect.

The courts are now asking the Missouri court to act quickly saying the Education Department could “unlawfully mass cancel up to hundreds of billions of dollars in student loans as soon as Monday.”

Also joining the suit are Alabama, Arkansas, Florida, North Dakota and Ohio.

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