Student Loan Forgiveness Whiplash: 24 Hours Of Chaos

The Biden administration secured a brief legal victory on October 2, 2024 when a Georgia judge ruled that Georgia didn’t have standing, and instead transferred the case to a Missouri court. As part of the ruling, the preliminary injunction that was blocking student loan debt relief was removed.

However, that victory was short-lived, as a federal court in Missouri granted another preliminary injunction late on October 3, once again blocking the plan.

President Biden’s updated student loan forgiveness program, often referred to as “Plan B,” was created after the Supreme Court struck down the administration’s original debt relief plan. Under the new program, millions of borrowers could receive targeted relief based on factors like how long they’ve been repaying loans, the interest accrued, and whether they attended institutions that failed to meet federal standards. 

While the legal basis for this program differs from the first, it has faced fierce opposition from several Republican-led states.

Georgia Ruling: Short-Lived Win

In September, a coalition of Republican-led states, spearheaded by Missouri, filed a lawsuit to prevent the Biden administration from implementing its upcoming student loan forgiveness plan. The states argued that the plan would hurt state finances, particularly through losses to state-affiliated student loan servicers like Missouri-based MOHELA. A Georgia judge responded by issuing a temporary restraining order, putting a hold on the forgiveness initiatives.

In a surprise ruling on October 2, the Georgia court found that the State of Georgia, one of the plaintiffs, lacked sufficient standing to claim injury from the student loan forgiveness plan. Instead of dismissing the case, though, the judge transferred the lawsuit to Missouri, acknowledging that Missouri’s reliance on MOHELA gave the state stronger standing to challenge the program.

This move briefly opened the door for the Biden administration to proceed with the program’s implementation.

Missouri Ruling: Another Injunction 

Unfortunately for borrowers, the victory was short-lived. Late on October 3, 2024, a federal court in Missouri granted another preliminary injunction, once again halting Biden’s the loan forgiveness program.

Missouri has played a central role in legal efforts to stop Biden’s attempts at mass student loan forgiveness.

The state previously succeeded in using MOHELA, the state-affiliated loan servicer, as a basis for standing in lawsuits. This legal battle marks the third time Missouri has been involved in lawsuits designed to block student loan forgiveness efforts, and it comes on the heels of the ongoing litigation against the administration’s SAVE plan.

What’s Next For Borrowers?

For now, borrowers will have to wait and see how the Missouri court proceeds. The same applies to waiting for the outcome of the SAVE Plan litigation, which may have some early rulings in the next month.

The problem is that millions of borrowers are stuck in limbo, and these whiplash student loan rulings only make things worse.

Don’t Miss These Other Stories: