Biden’s student loan cancellation plan has been put on hold again a day after the legal blowback

Just as it appeared briefly that the Biden administration would have a window to move forward with its plan, U.S. District Judge Matthew Schelp of Missouri granted an injunction blocking any widespread repeal.

Six Republican-led states sought the order hours earlier after a federal judge in Georgia decided not to extend a separate order blocking the plan.

The states, led by Missouri’s attorney general, urged Schelp to act quickly, saying the Department of Education could be “unlawfully foreclosing hundreds of billions of dollars in student loans.” Schelp called it an easy decision.

Biden’s plan has been on hold since September, when the states filed a lawsuit in Georgia, arguing that Biden exceeded his legal authority. But on Thursday, U.S. District Court Judge J. Randal Hall decided not to extend the stay after finding that Georgia lacked legal standing to sue in the case.

Hall dismissed Georgia from the case and transferred it to Missouri, which Hall said has “clear performance” to challenge Biden’s plan.

Student loan cancellation advocates briefly held out hope that the plan would move forward — Hall’s order was set to expire after Thursday, allowing the Department of Education to finalize the rule. But Schelp’s order put the question to rest.

“This is yet another victory for the American people,” Missouri Attorney General Andrew Bailey said in a statement. “The Court Rightly Recognized That Joe Biden and Kamala Harris Can’t Put Working Americans in Ivy League Debt.”

Biden’s plan would wipe out at least some of the student loan debt for about 30 million borrowers.

It would wipe out up to $20,000 in interest for those who saw their original balances rise because of freed interest. It would also provide relief to those who took 20 or 25 years to repay their loans and to those who attended college programs that leave graduates with large debts relative to their incomes.

Biden told the Education Department to pursue the repeal through a federal regulatory process after the Supreme Court rejected an earlier plan using a different legal justification. That plan would eliminate up to $20,000 for 43 million Americans.

The Supreme Court rejected Biden’s first proposal in a case brought by Republican states, including Missouri.

In his order Wednesday, Hall said Georgia failed to show it was significantly harmed by Biden’s new plan. He rejected an argument that the policy would hurt the state’s income tax revenue, but found that Missouri has a strong case.

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 lawsuit, Missouri claims the cancellation would hurt MOHELA’s revenue because it is paid based on the number of borrowers it serves.

In their lawsuit, Republican states say the Education Department quietly told loan servicers to prepare for loan cancellations as early as Sept. 9, bypassing a normal 60-day waiting period for new federal rules to take effect.

Also joining the suit are Alabama, Arkansas, Florida, North Dakota and Ohio.