Federal judge blocks revamped Biden student loan handout, latest legal setback for the administration

A federal judge in Georgia has temporarily blocked President Biden’s administration from implementing its plan to waive federal student loans for almost 30 million borrowers.

U.S. District Judge J. Randal Hall issued the order on Thursday, ruling that the states currently suing the administration over the plan have established a case likely to prove the Department of Education does not have the authority to implement the loan forgiveness. 

“Plaintiffs show a substantial likelihood of success on the merits given the rule’s lack of statutory authority,” the judge wrote, according to Reuters.

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The ruling is the latest in a long series of roadblocks to the administration’s campaign to wipe the slate clean on tens of billions of dollars in student debt via the Higher Education Act of 1965.

Seven GOP-led states filed the lawsuit earlier this week challenging the Biden administration’s most recent student debt forgiveness plan, accusing the U.S. Department of Education (DOE) of taking steps to cancel loans beginning as early as this week.

In the lawsuit filed Tuesday in a Brunswick, Georgia, federal court, attorneys general from Republican-led states — including Georgia and Missouri — took aim at a rule by the DOE proposed in April, which would provide for a waiver of federal student loan debts for approximately 27.6 million borrowers.

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The attorneys claim in the lawsuit that they recently obtained documents showing the DOE instructed federal loan servicers to begin canceling hundreds of billions of dollars of loans as early as Tuesday or Saturday before the rule was finalized. 

The attorneys argue that the DOE does not have the authority to cancel the student loan debt. The Thursday order temporarily restrains the Biden administration from implementing the program. 

It also broadly restricts officials from “mass canceling student loans, forgiving any principal or interest, not charging borrowers accrued interest, or further implementing any other actions under the Rule or instructing federal contractors to take such actions,” according to Business Insider.

Missouri and Georgia are joined in the lawsuit by Alabama, Arkansas, Florida, North Dakota and Ohio.

“We successfully halted their first two illegal student loan cancelation schemes; I have no doubt we will secure yet another win to block the third one,” Missouri Attorney General Andrew Bailey previously said in a statement.

In a previous effort, Biden introduced the Saving on a Valuable Education (SAVE) plan after the Supreme Court struck down his proposed student loan forgiveness plan. The White House said that the SAVE plan could lower borrowers’ monthly payments to zero dollars, reduce monthly costs in half and save those who make payments at least $1,000 yearly. Additionally, borrowers with an original balance of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments. 

Legal challenges from Republican-led states resulted in a temporary block of the program until the litigation concluded. The 8th Circuit Court of Appeals issued a preliminary injunction blocking the SAVE plan.

The block prevents the DOE from offering the plan while litigation continues.

FOX Business’ Greg Wehner contributed to this report.