Biden can now move forward with student loan forgiveness

NAfter a federal judge ruled that the Biden administration can proceed with its student loan forgiveness program and lifted an injunction that had blocked debt relief for over 25 million Americans, many are hoping for rapid implementation of relief measures.

But no significant changes are expected immediately as the Biden administration works to finalize its proposal amid ongoing litigation that could delay relief efforts.

The ruling, issued by U.S. District Judge J. Randal Hall in Georgia, allows the Biden administration to finalize a plan aimed at providing targeted relief to borrowers struggling under the burden of student debt.

The judge’s decision, made late Wednesday, represents a modest victory for President Joe Biden’s efforts to ease the burden of federal student loans after a series of legal challenges. The administration’s proposed plan would provide partial or full student loan forgiveness under certain conditions, including for borrowers who have been repaying their loans for 20 to 25 years and for those who owe significantly more than they originally borrowed due to accrued interest , and for individuals who have participated in job training programs, result in high debt and low income.

The ruling marks a crucial turning point just weeks before the Nov. 5 presidential election, in which the issue of student debt could loom large. The legal battle over Biden’s student forgiveness program gained momentum in September when seven Republican-led states – Missouri, Georgia, Alabama, Arkansas, Florida, North Dakota and Ohio – sued the Biden administration, arguing that its proposed forgiveness plan violates the Violating the state would impact revenue and place an unfair burden on taxpayers.

In his ruling, Judge Hall dismissed Georgia from the lawsuit, writing that the state had not adequately demonstrated that it would suffer specific harm as a result of the program. The case has now been transferred to the Eastern District of Missouri, where further litigation will continue in the coming weeks. Missouri Attorney General Andrew Bailey, who is leading the lawsuit against the program, alleges that the Missouri Higher Education Loan Authority (Mohela), a quasi-governmental agency that administers federal student loans, is suffering financial losses due to reduced revenue from servicing those loans would if the program continues.

While advocacy groups hailed the judge’s decision as a necessary step to provide relief to those caught in a cycle of debt, they also noted that the legal challenges are not over, with opposition among conservative lawmakers who argue that the program is a imposes an unfair burden on taxpayers and is a politically motivated attempt to influence voters before the election.

“This case is far from over,” the nonprofit Student Borrower Protection Center said in a statement Thursday. “The administration must not give the Missouri AG the power to challenge decisions it rejects and must immediately ensure that borrowers receive the compensation they deserve.”

A key component of the Biden administration’s plan is to allow borrowers to eliminate up to $20,000 in accrued interest, regardless of their income level. Single borrowers earning less than $120,000 and married couples earning less than $240,000 are eligible for full forgiveness of all accrued interest as long as they participate in an income-driven repayment plan. The White House estimates that this feature alone could benefit over 25 million people and cost $147 billion over a decade.

The Biden administration began developing the revised plan after the Supreme Court in 2023 struck down its attempt to forgive up to $20,000 in student debt for more than 40 million borrowers. The new plan aims to target those excluded from existing relief measures and, in particular, to address the long-term consequences of student loans that have grown beyond the original amount due to interest.

While the expiration of the injunction allows the Department of Education to finalize the new rules, immediate implementation of the program is not expected. The Biden administration is currently working on publishing the final rule, which is expected later this fall. Meanwhile, Republican-led states on Thursday sought an injunction to block regulation while legal battles continue, potentially prolonging uncertainty for millions of borrowers hoping for relief.

The Biden administration has made student debt relief a key part of its policy agenda, aiming to provide relief to millions of borrowers burdened by loans. Education Secretary Miguel Cardona emphasized the importance of student debt relief in an interview with TIME published in May. “Higher education has been out of reach for too many Americans,” he said. “We’re fixing a broken system – debt relief is part of it.”

Cardona said at the time that four million people had received debt relief in the last three years and that one in 10 student loan borrowers had received debt relief – about $160 billion.