Biden Can Move Forward With Student Loan Forgiveness. What Happens Next

Now that a federal judge has ruled that the Biden Administration can proceed with its student loan forgiveness program, lifting a temporary restraining order that had prevented the discharge of debt for over 25 million Americans, many are hoping for a swift implementation of relief measures.

But significant changes are not expected immediately as the Biden Administration works to finalize its proposal amid ongoing litigation that could delay relief efforts.

The ruling, issued by U.S. District Judge J. Randal Hall in Georgia, allows the Biden Administration to finalize a plan aimed at providing targeted relief to borrowers who have struggled under the weight of student debt.

The judge’s decision, which came late Wednesday, represents a modest victory for President Joe Biden’s efforts to alleviate federal student loan burdens following a series of legal challenges. The Administration’s proposed plan would offer partial or full forgiveness of student loans under specific conditions, including for borrowers who have paid off their loans for 20 to 25 years, those who owe significantly more than they originally borrowed due to accrued interest, and individuals who attended career training programs resulting in high debt with low earnings.

The ruling marks a critical turning point just weeks ahead of the Nov. 5 presidential election, where the issue of student debt could play a prominent role. The legal battle over Biden’s student forgiveness program gained steam in September when seven Republican-led states—Missouri, Georgia, Alabama, Arkansas, Florida, North Dakota, and Ohio—sued the Biden Administration, arguing that its proposed forgiveness plan would infringe on state revenues and unfairly burden taxpayers.

In his ruling, Judge Hall dismissed Georgia from the lawsuit, writing that the state had not sufficiently demonstrated that it would suffer concrete harm from the program. The case has now been transferred to the Eastern District of Missouri, where further legal proceedings will continue in the coming weeks. Missouri Attorney General Andrew Bailey, who is leading the challenge against the program, contends that the Missouri Higher Education Loan Authority (Mohela), a quasi-state agency that services federal student loans, would suffer financial losses due to reduced revenue from servicing these loans if the program goes forward.

While advocacy groups hailed the judge's ruling as a necessary step towards providing relief to those caught in a cycle of debt, they also noted that the legal challenges are not over as opposition remains fierce among conservative lawmakers who argue that the program imposes an unfair burden on taxpayers and is a politically motivated attempt to sway voters ahead of the election. 

“This case is far from over,” the Student Borrower Protection Center nonprofit said in a statement Thursday. “The Administration must not grant the Missouri AG the power to challenge any decision he opposes and must immediately ensure borrowers get the relief they deserve.” 

A key component of the Biden Administration’s plan is that it would allow borrowers to have up to $20,000 in accrued interest eliminated, regardless of their income level. Single borrowers earning less than $120,000 and married couples with an income under $240,000 can qualify for complete forgiveness of all accrued interest, provided they are enrolled in an income-driven repayment plan. The White House estimates that this feature alone could benefit over 25 million people, and would cost $147 billion over a decade.

The Biden Administration began working on the revised plan after the Supreme Court in 2023 struck down its attempt to forgive up to $20,000 in student debt for more than 40 million borrowers. The new plan seeks to target those who have been excluded from existing relief efforts, particularly addressing the long-term consequences of student loans that have spiraled beyond original amounts due to interest.

While the expiration of the restraining order allows the Education Department to finalize the new rules, immediate implementation of the program is not expected. The Biden Administration is currently working to publish the final rule, expected later this fall. Meanwhile, the GOP-led states on Thursday filed for an injunction to block the regulation as litigation continues, potentially prolonging uncertainty for millions of borrowers eager for relief.

The Biden Administration has made student debt forgiveness a key part of its policy agenda, aiming to provide relief for millions of borrowers burdened by loans. Education Secretary Miguel Cardona emphasized the importance of student debt relief in an interview with TIME published in May. “Higher education has been out of reach for too many Americans,” he said. “We’re fixing a broken system—debt relief is a part of it.”

Cardona said at the time that four million people have had debt relief in the last three years, and that one in ten student borrowers have had their debt relieved—around $160 billion.