A US federal court on Thursday blocked the Department of Education’s revised student debt relief plan from taking effect in six states. The preliminary injunction came on the final day of a temporary restraining order that was set to expire.
Effective immediately, the ruling stops the Department of Education from mass cancellation of student loans and forgiving interest in the states of Alabama, Arkansas, Florida, Missouri, North Dakota, and Ohio. Unlike the temporary restraining order, which was granted to give the parties time to present their procedural arguments, this order may remain in place until the merits of the case are decided by the court. The state of Georgia was initially a party to the suit but was removed from the case two days ago for lack of standing.
The revised plan was the Department of Education’s second attempt at a comprehensive student debt forgiveness policy, which was a key 2020 campaign promise of President Joseph Biden. The first debt relief plan, which was announced in August 2022, relied on a provision of the HEROES Act of 2003 to cancel student debt. The policy was met with pushback from several states, and the US Supreme Court shut down the plan in June 2023, when it ruled that the Department of Education was acting outside of its authority and would need congressional approval to cancel approximately $430 billion in debt.
The second plan is based on Section 423(a)(6) of the Higher Education Act, which authorizes the Secretary of the Department of Education to “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired.”
The US Department of Education has faced numerous obstacles to its proposed rule. The crux of the states’ position is that the executive branch of government is bypassing congressional review of significant fiscal policy that would affect taxpayers in their states. The Department of Education claims that its interpretation of the Higher Education Act is lawful and confers authority to implement this student debt relief plan.
This latest injunction, in addition to the US Supreme Court declining to reinstate the SAVE loan initiative, means the merits of the parties’ arguments will be heard by the US District Court Eastern District of Missouri, subject to review by the appellate court and US Supreme Court.
