The plan would affect millions of borrowers struggling with runaway interest and others who were still paying off loans after decades. It was set to take effect this fall.
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The states bringing the lawsuit argued that they had obtained evidence that the Education Department had notified federal contractors to “immediately” begin canceling some balances.
A federal judge placed a temporary hold on another component of President Biden’s student debt relief plan on Thursday, siding with a coalition of seven Republican states that filed a lawsuit to halt the program on Tuesday.
The ruling comes as yet another blow to the president’s student debt relief agenda after the Supreme Court upheld a similar hold on the SAVE program, the centerpiece of his strategy to cancel tens of millions of dollars in student debt.
The plan at issue in Thursday’s ruling is meant to cancel debt for as many as 27 million borrowers who saw interest on their loans balloon over time, or who were still paying off loans after at least 20 years.
Even though the policy was not scheduled to go into effect until the fall, the states bringing the lawsuit argued that they had obtained evidence that the Education Department had notified federal contractors to “immediately” begin canceling some balances.
“Through cloak and dagger, the Department has thus finalized a rule with a rollout plan that is maximally designed to forgive tens or hundreds of billions of dollars without any judicial review and is designed to boost the incumbent Democratic presidential candidate two months before the election,” the complaint filed on Tuesday read.
The Department did not immediately respond to a request for comment.
Among the main components of the rule is a provision to forgive the full amount of interest borrowers accrued, provided they earn less than $120,000 for single borrowers or $240,000 for married couples and are enrolled in an income-driven repayment plan. Another provision permits a one-time, automatic cancellation of up to $20,000 in accrued interest for borrowers regardless of income.
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Source: nytimes.com
