Federal judge hears lawsuit on Biden student loan forgiveness program

Financial Wellness Student Loans
Posted at 1:04 PM, Oct 13, 2022

A federal judge in Missouri will soon decide whether to temporarily stop President Joe Biden's student loan forgiveness program from moving forward.

It's unclear when District Judge Henry Edward Autrey will make his decision, but he told both parties after hearing the motion on Wednesday that he'd have an answer to them soon, CNN and Missouri Independent reported.

Last month, the Associated Press reported that six Republican attorney generals in Missouri, Arkansas, Kansas, Nebraska, South Carolina, and Iowa filed a lawsuit saying the policy would financially hurt them and MOHELA, a student loan provider in Missouri.

The states also argued that the Biden administration does not have the legal authority to grant broad student loan forgiveness, the news outlets reported.

In August, the Biden administration announced that they aimed to cancel the student debt for millions of borrowers.

Federal student loan borrowers that meet income requirements could have up to $10,000 of their student loans forgiven, while those who received Pell Grants in college could have up to $20,000 of their loans forgiven.

Initially, if you had Federal Family Education Loans owned by MOHELA, the policy would have allowed you to consolidate direct Loans owned by the government, the Associated Press reported.

But the same day the lawsuit was filed, the Department of Education changed its policy, stating that those loans were no longer eligible to be consolidated into the government’s direct lending program, according to the news outlet.

MOHELA alleges in the lawsuit that it would lose revenue from loans it owns through the Federal Family Education Loan Program, the Associated Press reported.