Federal judge blocks Republican-led challenge to Biden’s student-debt relief plan

A federal judge ruled Friday that six Republican-led states lack standing to file suit to block President Biden’s plan to cancel up to $20,000 in student debt for tens of millions of federal student loan borrowers.

In the suit, Missouri Attorney General Eric Schmitt argued that the Missouri Higher Education Loan Authority would suffer ongoing, irreparable harm due to increased “compliance costs” and the prospect of “imminent loss of revenue” should fewer Americans owe student loans.

The effect of the argument, signed onto by Republican attorneys general in Kansas, Nebraska, South Carolina and Arkansas, and the Solicitor General of Iowa, was to make the claim that a state-backed student loan company hired to act as a federal contractor had standing to veto federal student loan policy nationwide in order to protect its profits.

James Campbell, an attorney for the Nebraska attorney general’s office, said at an Oct. 12 hearing to consider whether to grant MOHELA’s motion to block student debt relief that the Biden administration is acting outside its authority in a way that would ultimately cost states millions of dollars.

A spokesperson for the Nebraska attorney general’s office said today that the states plan to appeal the ruling, and that they “continue to believe that they do in fact have standing to raise their important legal challenges.”

Student Borrower Protection Center managing counsel Persis Yu said after the ruling today’s decision brings student loan borrowers “one step closer to getting the student loan relief they desperately need and that President Biden has promised to deliver.”

“This politically and profit-motivated effort to halt President Biden’s historic plan to deliver vital relief has failed, preserving debt relief for working and middle-class families as they recover from the pandemic,” Yu said. “The administration must move fast to ensure that all eligible borrowers are able to access this relief and benefit from this life-changing policy.  As this federal judge signaled, the law will not be manipulated to prioritize the interests of political interests and lenders desperate to make a buck off of the backs of struggling borrowers.”