Student Loans

Judge halts further student loan forgiveness under part of Biden's new repayment plan

The order from a federal judge in Missouri temporarily prohibits the Biden administration from forgiving loans under the SAVE plan.

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A federal judge on Monday temporarily barred the Education Department from allowing additional loan forgiveness under a key component of President Joe Biden's student debt relief plan.

The judge's order halted the cancellation of loans under the income-driven repayment plan known as SAVE after several states sued over the program.

The Biden administration is "preliminarily enjoined from any further loan forgiveness for borrowers under the Final Rule’s SAVE plan until such time as this Court can decide the case on the merits," U.S. District Judge John A. Ross wrote.

The SAVE plan came about after the Supreme Court last year rejected a broader effort at debt by the Biden administration under its pandemic-era relief plan, which aimed to erase up to $20,000 in student debt for about 43 million borrowers.

The judge also rejected an effort by the Biden administration to dismiss the case, saying that the states that brought the lawsuit had standing and "are likely to succeed on the merits of their argument that the early loan forgiveness provisions...were promulgated in a manner exceeding the Secretary’s statutory authority," referring to the secretary of education.

The Education Department did not immediately provide a comment on Monday evening.

Missouri State Attorney General Andrew Bailey, representing one of the seven states that brought the lawsuit, lauded the ruling.

“By attempting to saddle working Missourians with Ivy League debt, Joe Biden is undermining our constitutional structure,” Bailey said in a statement. “Only Congress has the power of the purse, not the President. Today’s ruling was a huge win for the rule of law, and for every American who Joe Biden was about to force to pay off someone else’s debt.”

Arkansas Attorney General Tim Griffin said: "With Independence Day fast approaching, another court has reminded President Biden that he is not a king. He can’t go around Congress and unilaterally cancel student loans. He should have learned that from Schoolhouse Rock!"

The other states involved in the lawsuit are Florida, Georgia, North Dakota, Ohio and Oklahoma.

In their lawsuit, the states had asked the judge to declare that the program violated the separation of powers under the Constitution.

Ross said that other aspects of the program, such as lowering monthly payments and limiting interest accrual, are benefiting borrowers and can continue, adding that the states that sued "have not shown that these provisions harm them."

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