Temporary Halt on Biden Administration's Student Loan Cancellation Plan
A federal judge in Georgia has temporarily halted the Biden administration's latest initiative to cancel federal student loans for up to 30 million borrowers. The 14-day restraining order was issued on September 5, following a lawsuit by a coalition of seven Republican-led states. These states claimed that the federal government was unlawfully attempting to cancel hundreds of billions of dollars in loans, with plans to do so by September 7.
Details of the Plan
The plan, commonly referred to as "Plan B," has been in development since last summer. This was after the U.S. Supreme Court struck down the Biden administration's initial effort to cancel up to $400 billion in student loans. The plan is yet to be published, but borrowers were asked last month to confirm if they wanted to opt-out.
According to the U.S. Department of Education, Plan B would primarily benefit those who owe more than they initially borrowed due to accrued interest. It would eliminate up to $20,000 beyond the principal balance, regardless of the borrower's income. Approximately 23 million people could see their entire interest balances wiped out.
The Education Department could also forgive the debt of those who have been repaying for at least 20 or 25 years, those who qualify for loan forgiveness under other programs but haven't applied, and those who attended schools that lost access to federal aid, suddenly closed, or left graduates financially worse off.
A fifth category of borrowers would have their debt forgiven based on certain "hardships" that persist after other benefits are exhausted, such as medical debt and expensive child care. The specifics are still under review.
Opposition to the Plan
The coalition of seven states, led by Missouri Attorney General Andrew Bailey, contends that the Education Department does not have the authority to cancel debt on such a large scale. The coalition also pointed out that the department's income-driven loan repayment program, known as SAVE, is also on hold while an appeals process over its legality is ongoing.
The complaint stated, "This is the third time the Secretary has unlawfully tried to mass cancel hundreds of billions of dollars in loans. Courts stopped him the first two times, when he tried to do so openly. So now he is trying to do so through cloak and dagger."
Judge J. Randal Hall of the Southern District of Georgia agreed with the states, pausing Plan B until a hearing on September 18.
Reaction to the Decision
Bailey welcomed the decision, calling it a "huge victory" for Americans who have already paid off their student loans or didn't go to college at all. He stated, "I paid for my education in blood, sweat, and tears in service to my country, so this fight is personal for me. We will continue to lead the way for working Americans who are being preyed upon by unelected federal bureaucrats in Washington D.C."
The lawsuit is supported by the attorneys general of Alabama, Arkansas, Florida, Georgia, North Dakota, and Ohio. The Education Department has not yet responded to a request for comment.
Bottom Line
This latest development in the ongoing debate about student loan forgiveness raises important questions about the authority of the federal government and the fairness of mass debt cancellation. What are your thoughts on this issue? Do you agree with the decision to halt the plan, or do you believe that student loan forgiveness is a necessary step? Share your thoughts with your friends and consider signing up for the Daily Briefing, which is delivered every day at 6pm.
