A US judge grants a toss out of Republican lawsuit against Biden’s student debt relief By Reuters

By Daniel Wiessner and Nate Raymond

(Reuters) – A federal judge reversed a legal challenge by seven Republican-led states to the latest student debt forgiveness plan from President Joe Biden’s administration, removing Georgia from the case and moving it to Missouri .

U.S. District Judge J. Randal Hall, based in Augusta, Ga., took the action Wednesday, a day before a temporary restraining order he issued Sept. 5 blocking the administration from proceeding with the plan — a regulation by the Department Education in the US that is still unfinished – has been set to expire.

Hall ruled that Georgia, which along with Missouri led the lawsuit, failed to prove it would be harmed by the administration’s plan to forgive $73 billion in student loan debt held by millions of Americans.

The judge removed Georgia from the case for lack of legal standing, despite the state’s claim of potential lost tax revenue, and transferred the litigation to federal court in Missouri.

“There is no indication that the rule is being enacted to attack states or their income taxes, so any loss of … tax revenue is incidental and insufficient to create standing for Georgia,” Hall wrote.

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

The administration proposed the regulation in April after earlier plans were blocked by the courts. Biden, as a candidate in 2020, has pledged to bring debt relief to millions of Americans who have taken out federal student loans to finance their expensive higher education. The draft regulation, according to court filings, would allow the government to offer full or partial debt relief to an estimated 27.6 million borrowers.

States challenging the policy on Thursday asked a federal judge in Missouri to rule by Friday on whether to continue blocking the proposal. The case was assigned to U.S. District Judge Matthew Schelp, an appointee of former Republican President Donald Trump.

An Education Department spokesman, in a statement, expressed appreciation for “the judge’s recognition that this case has no legal basis to be brought in Georgia” and said the lawsuit reflects the effort of Republican state officials “to prevent millions of their own constituents from getting room for their student loans.”

“We will continue our legal efforts to provide relief to more Americans, including vigorously defending these proposals in court,” the spokesperson added.

The Georgia and Missouri attorneys general’s offices did not respond to requests for comment.

According to the draft regulation, debt relief would be granted to: people who owe more than they borrowed the first time due to accrued interest; those paying off loans for at least 20 or 25 years, depending on the circumstances; and borrowers who were eligible for forgiveness under previous programs but never applied.

The fact that the rule had not yet been finalized was cited by the US Department of Justice to argue that there was no final agency action for the judge to review in the first place. The states argued that the administration was laying the groundwork to immediately cancel the loans once the rule became final before anyone could sue to stop it.

The White House said the current student loan system is broken and said debt relief is needed to ensure borrowers are not financially burdened by their decision to pursue higher education.

Republicans argue that the Democratic president’s approach to student loan forgiveness amounts to an overreach and unfairly benefits college-educated borrowers while others receive no such relief.