Last month, a group of seven Republican-led states sued to stop President Joe Biden’s new student loan forgiveness plan, which his administration developed after the Supreme Court shot down his original proposal.

On Wednesday, a federal judge in Georgia appointed by Republican President George W. Bush handed the Biden administration a small victory, allowing a temporary restraining order to expire while the lawsuit plays out.

But on Thursday, a second federal judge in Missouri issued a preliminary injunction prohibitting the Biden administration "from mass canceling student loans, forgiving any principal or interest, not charging borrowers accrued interest, or further implementing any other actions under the Rule or instructing federal contractors to take such actions."


What You Need To Know

  • Last month, a group of seven Republican-led states sued to stop President Joe Biden’s new student loan forgiveness plan, which his administration developed after the Supreme Court shot down his original proposal
  • On Wednesday, a federal judge appointed by Republican President George H.W. Bush handed the Biden administration a small victory, allowing a temporary restraining order to expire while the lawsuit plays out
  • But on Thursday, a second federal judge in Missouri appointed by former President Donald Trump forbade the Biden administration from pursuing its student loan forgiveness plan until the courts decide on its legality
  • The yet-to-be-finalized plan has been in the works since the Supreme Court struck down Biden’s original and broad proposal to forgive up to $20,000 in student debt for all Americans making under a certain income

In other words, the Biden administration has been expressly forbidden from pursuing its student loan forgiveness plan until the courts decide on its legality. The Department of Education did not immediately return a request for comment on the Missouri judge's ruling.

U.S. District Judge Matthew Schlep, out of the Eastern District of Missouri, was the one who made the ruling. He was appointed by former President Donald Trump in 2019 and confirmed by the Senate in 2020. The rulings come just a month before Election Day and as voters are already casting ballots in some states, with Vice President Kamala Harris running against Trump in part on a promise to continue forgiving student loan debt.

“The Biden-Harris Administration is dedicated to saddling working Americans with Ivy League debt, even if they have to break the law to do it. Our latest lawsuit challenges their third and weakest attempt to mass-cancel student loans in the dark of night without letting Congress – or the public – know about it. That’s illegal,” said Missouri state Attorney General Andrew Bailey in a statement. Bailey is taking the lead on the lawsuit and has repeatedly challenged the Biden administration's student debt relief plans.

“We successfully halted their first two illegal student loan cancellation schemes; I have no doubt we will secure yet another win to block the third one," Bailey added. "They may be throwing spaghetti at the wall to see what sticks, but my office is meeting them every step of the way.”

Missouri is suing on behalf of MOHELA, a student loan servicer that was created by the state and is hired by the federal government to help collect student loans. In the suit, Missouri argues that cancellation would hurt MOHELA's revenue because it's paid based on the number of borrowers it serves.

In their lawsuit, the Republican states argue that the Education Department had quietly been telling loan servicers to prepare for loan cancellation as early as Sept. 9, bypassing a typical 60-day waiting period for new federal rules to take effect.

Judge J. Randal Hall, the federal judge in the Southern District of Georgia, granted the seven states — Alabama, Arkansas, Florida, Georgia, Missouri and Ohio — a temporary restraining order on Sept. 5, but ruled on Thursday that the case should be moved to the Eastern District of Missouri and that Georgia had no standing in the lawsuit. And he let the restraining order expire.

“While we appreciate the District Court’s acknowledgement 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 after the Georgia ruling, but prior to the Missouri decision. “We will continue our lawful efforts to deliver 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.”

The yet-to-be-finalized plan has been in the works since the Supreme Court struck down Biden’s original and broad proposal to forgive up to $20,000 in student debt for all Americans making under a certain income. 

The new and narrower proposal, outlined by Biden during a trip to Wisconsin in April, would provide at least some level of loan forgiveness for more than 30 million people. It focuses on specific categories of borrowers: those who now owe more on their students loans than when they entered repayment due to interest; certain borrowers who have been in repayment for more than 20 or 25 years; those who would be eligible for forgiveness based on actions already taken but have not applied; and those who enrolled in low-financial value programs, such as an institution that failed the department’s accountability standards. 

The plan was expected to be finalized this fall and the administration began emailing people who may be eligible for relief earlier this summer. 

Moving forward with the plan before the rule was finalized, the Republican states argued in their suit last month, was illegal. 

The liberal think tank Center for American Progress estimated Biden’s plan could relieve the debts of three in four borrowers.

Spectrum News’ Maddie Gannon contributed to this report. The Associated Press contributed to this report.