A federal judge threw out a lawsuit seeking to block student-loan forgiveness for over 800,000 borrowers

Ayelet Sheffey
Updated ·2 min read
360

  • A federal judge dismissed a lawsuit to block student-debt relief from income-driven repayment plans.

  • Last week, conservative-backed groups filed a lawsuit to block relief for 800,000 borrowers.

  • The judge said the groups lacked standing to bring the case.

President Joe Biden's student-debt relief for thousands of borrowers on income-driven repayment plans can officially move forward.

On Monday, Judge Thomas Ludington in the Eastern District of Michigan Northern Division ruled that a lawsuit seeking to block $39 billion in debt relief for 800,000 borrowers lacks standing and is dismissed. Last week, the New Civil Liberties Alliance, a nonprofit aimed at protecting constitutional freedoms, filed a lawsuit on behalf of two conservative groups — the Cato Institute and the Mackinac Center for Public Policy — to block President Joe Biden's plans to get relief to borrowers who made the required 20 or 25 years of payments on income-driven repayment plans.

Prior to the lawsuit, the Education Department announced the first batch of relief for borrowers due to a one-time account adjustment that determined the borrowers who completed their necessary payments — and the discharges of their loans began on Monday.

The groups who filed the lawsuit argued that as nonprofits, the relief would undermine their recruiting efforts through the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after ten years of qualifying payments. Lundington wrote in his decision to dismiss the case that their claims surrounding PSLF were not sufficient to prove injury.

"Plaintiffs' presidents' own declarations do not suggest that any employee was actually impacted by the Adjustment," he said. "Their declarations merely assert that Plaintiffs plan to recruit PSLF participants in the future, some of whom may be impacted by the Adjustment. This is far too speculative for standing."

The Mackinac Center's Director of Public Relations Holly Wetzel told Insider that "the judge's ruling was not on the legality of the Biden administration's actions, but rather he indicated that we were not the right parties to challenge those actions. We are currently reviewing our legal options."

The ruling means that — barring other legal challenges — the Education Department will continue looking at borrowers' income-driven repayment accounts every two months to determine if they qualify for debt relief, and those who do not want the debt relief will have the option to opt out. Borrowers can also apply for the SAVE Plan before federal payments resume — a new income-driven repayment plan intended to make borrowers' monthly payments cheaper.

Read the original article on Business Insider