Student loan update: 27.6 million borrowers receive good news

Some 27.6 million student loan borrowers could benefit as a federal judge decided to bar Georgia from the lawsuit challenging President Joe Biden's student debt relief plan.

Georgia-based U.S. District Judge J. Randal Hall made the decision Wednesday. On Thursday, the injunction blocking the Biden administration from moving forward with its SAVE forgiveness plan expired.

The state of Georgia led the lawsuit along with Missouri, but Hall said there was no evidence that Georgia would be harmed by the federal government's move to forgive about $73 billion in student loan debt.

Now only Alabama, Arkansas, Florida, Missouri, North Dakota and Ohio are plaintiffs. And because of Georgia's lack of standing, the litigation in this case will be moved to Missouri.

Georgia originally argued that it would face tax losses and therefore had the legal right to challenge Biden's Education Department.

“There is no indication that the rule is being implemented to attack the states or their income taxes, so any loss of … tax revenue is accidental and insufficient to give Georgia standing,” Hall wrote.

However, Hall ruled that Missouri has cause to sue because the state operates a nonprofit student loan provider, the Missouri Higher Education Loan Authority (MOHELA). This service provider could potentially lose millions of dollars due to Biden's forgiveness plan.

Alex Beene, an instructor of financial literacy at the University of Tennessee at Martin, said Hall's decision represents a “ray of hope” for borrowers eligible for forgiveness.

“It’s a big win for student loan borrowers who qualify for the forgiveness conditions outlined by the Biden administration,” Beene said Newsweek.

“The temporary suspension of the loan forgiveness program was an attempt to stop further forgiveness efforts on the grounds that they would be financially harmful to certain states. Since this suspension will not be extended for the time being, the waiver initiative may be reinstated, although chances are high we will continue to see legal challenges to this effort in the coming months.”

Biden's first student debt relief plan was previously blocked by the Supreme Court, prompting his administration to make a new attempt to provide full and partial debt relief to 27.6 million Americans.

The specific student loan forgiveness plan calls for debt forgiveness for those who now owe more than they originally borrowed because of interest, as well as for those who have made payments for at least 20 or 25 years in certain circumstances.

Borrowers who were eligible for forgiveness under previous programs but never applied were also able to have their debt forgiven.

The states that filed the lawsuit claim the forgiveness plan exceeds the federal government's authority and unfairly favors those who attended college over those who did not.

“While we appreciate the district court's admission that this case has no legal basis in Georgia, the fact remains that this lawsuit reflects the ongoing efforts of Republican elected officials to prevent millions of their own voters from voting in their country to breathe.” Student loans,” said a spokesman for the Ministry of Education Newsweek.

“The proposed rule would increase the total number of borrowers eligible for student debt relief under the Biden-Harris Administration to over 30 million people. We will continue our lawful efforts to provide relief to more Americans, including by vigorously defending these proposals in court.” We will not stop fighting to fix the broken student loan system and provide support and relief to borrowers across the country. “

Update 10/3/24 4:28 p.m. ET: This article has been updated with comment from the Department of Education.