It was a busy two days on the student loan debt relief front. On Wednesday, one federal court in Georgia allowed Biden's $73 billion scheme to magically wipe out debt to move forward after removing Georgia from the list of states suing the government over the plan. A few hours later, another federal court in Missouri allowed the states' suit to continue.
U.S. District Judge J. Randal Hall for the Southern District of Georgia said Wednesday that Georgia does not have standing to sue the Biden administration over student debt relief because they failed to show the action would sufficiently harm them.
“Without standing, Georgia cannot provide the proper venue for suit because a plaintiff that lacks standing cannot create venue where it would not otherwise exist,” Hall wrote. He ordered the suit transferred to the U.S. District Court for the Eastern District of Missouri.
Georgia claimed that the state would be irreparably harmed due to lost tax revenue. Judge Hall didn't buy it and ordered the case transferred.
“While we appreciate the District Court’s acknowledgment that this case has no legal basis to be brought in Georgia, the fact remains that this lawsuit reflects an ongoing effort by Republican elected officials who want to prevent millions of their own constituents from getting breathing room on their student loans,” an Education Department spokesperson said in a statement.
St. Louis-based U.S. District Judge Matthew Schelp, an appointee of former President Trump, issued another preliminary injunction against Biden’s student loan debt relief scheme on Thursday.
When CNBC broke the news Thursday that the restraining order would lapse, consumer advocates and borrowers hoped that the Biden administration would try to move ahead quickly with its loan forgiveness plan for tens of millions of Americans. The Education Department has already prepared its loan servicers to start reducing and eliminating people’s debts.
However, Schelp cited this possibility as precisely the reason for delaying the administration while he considered the case.
“Allowing Defendants to eliminate the student loan debt at issue here would prevent this Court, the U.S. Court of Appeals, and the Supreme Court from reviewing this matter on the backend, allowing Defendants’ actions to evade review,” Schelp wrote.
“This is yet another win for the American people,” Missouri Attorney General Andrew Bailey said in a statement. “The Court rightfully recognized Joe Biden and Kamala Harris cannot saddle working Americans with Ivy League debt.”
Missouri has perhaps the best case of all the states. They are suing on behalf of the Missouri Higher Education Loan Authority (Mohela), a quasi-governmental agency created by the state to service student loans. Mohela is paid based on the number of borrowers it services. Eliminating its customers would damage its operations.
The lawsuit involves a proposed rule designed to reach borrowers who the Education Department says are shut out of existing loan forgiveness programs or have been trapped in unaffordable debt. The proposed plan, created through the federal negotiated-rulemaking process, is slated to be finalized this fall.
No debt can be forgiven under the policy before then, but the GOP-led states said the department instructed its loan servicers to start clearing balances before the rule is finalized. They said it was unprecedented for the department to let borrowers opt out of the plan before it even goes into effect. Although federal law says major rules may not take effect until 60 days after publication, the attorneys general claim the department intends to immediately begin forgiving loans once the rule is published, according to the complaint.
Biden continues to seek ways to circumvent the meaning and intent of court rulings, including the Supreme Court's decision to strike down the plan in June 2023.
Any hope Biden had of continuing his scheme to forgive debt without congressional approval before the election is now dead.
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