Federal judge gives Biden victory as Republicans challenge student loan rescue package

A federal judge on Wednesday rejected Republican efforts to thwart President Biden’s student loan rescue package, allowing the government to move forward with its debt relief plan weeks before the November election.

U.S. District Judge Randal Hall of Augusta excluded Georgia from a lawsuit brought by seven Republican-led states against the Biden administration after finding that the Peach State lacked standing to sue over the loan forgiveness lawsuit. The judge said Georgia had failed to show it would be harmed by the government’s plan to wipe out $73 billion in student loan debt for tens of millions of Americans.

The decision came a day before a temporary restraining order issued by Hall on September 5 expired. The judge did not extend the order and the Education Department is now allowed to finalize regulations to implement Biden’s plan.

Georgia had argued that the student loan bailout would result in tax losses, but Hall, a Republican member, disagreed and transferred the case to federal court in Missouri.

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

The judge had previously ruled that Missouri had standing to sue because that state operates a nonprofit student loan servicer that would directly lose millions of dollars in funding under the debt relief plan.

The government proposed the scheme in April after earlier plans were blocked by the courts. As a candidate in 2020, Biden promised to provide debt relief to millions of Americans who turned to federal student loans to finance their higher education. According to court documents, the draft regulations would allow the government to provide full or partial debt relief to an estimated 27.6 million borrowers.

In addition to Georgia and Missouri, Republican attorneys general in Alabama, Arkansas, Florida, North Dakota and Ohio are also involved in the lawsuit challenging the policy. The states asked Trump-appointed U.S. District Judge Matthew Schelp in Missouri to decide Friday whether to extend the preliminary injunction blocking the proposal.

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An Education Department spokesman praised the judge’s “recognition that there is no legal basis for litigation in Georgia in this case” in a statement to Reuters. The spokesman called the lawsuit led by the Republican Party an attempt to “prevent millions of their own constituents from getting relief on their student loans.”

“We will continue our lawful efforts to provide assistance to more Americans, including by vigorously defending these proposals in court,” the spokesperson added, according to Reuters.

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The Biden administration’s proposal would bail out borrowers who owe more than they originally borrowed due to accrued interest; People who have been in repayment for at least 20 to 25 years, depending on their circumstances; and borrowers who were eligible for student loan forgiveness under previous programs but never applied.

The Justice Department had argued that there was no regulatory action for the judge to consider in this case because the Education Department had not yet finalized the rule. The Republican-led states insisted that the Biden administration was preparing to immediately cancel student loan debt as soon as the rule became law, before the lawsuit could be challenged in court.

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The White House has said the student loan bailout is a necessary measure to provide relief to millions of borrowers burdened by loans they took out for higher education.

Republican critics of the plan said the president did not have the authority to cancel student loan debt without an order from Congress and said the bailout was unfair to taxpayers and other borrowers who had already repaid their loans without relief.

Reuters contributed to this report.