A federal judge on Monday dismissed a lawsuit from two conservative groups seeking to block student loan forgiveness for more than 800,000 borrowers.
The outstanding debt in question, worth about $39 billion, is what borrowers still owe after making 20 to 25 years’ worth of payments.
The suit from the Cato Institute and Mackinac Center – filed on their behalf by the New Civil Liberties Alliance in federal court in Michigan – argued the federal government lacks the authority to forgive the debt and was working on an accelerated schedule “to evade judicial review.”
The U.S. Education Department said last month that it was adjusting how it calculates student loan payments in a move to correct past errors, which would result in about 804,000 people having the balance of their loans erased over the next few months.
Judge Thomas L. Ludington, an appointee of President George W. Bush, dismissed the groups’ case and rejected a request that the forgiveness be temporarily blocked. Ludington said the conservative groups did not show that they would be harmed by the plan.
The Biden administration said in April 2022 that it would make a one-time adjustment to borrowers’ payment histories to ensure they are getting all the credit they should. The Government Accountability Office had previously flagged a problem tracking borrowers’ payments.
“We found thousands of borrowers still in repayment who could be eligible for forgiveness now,” the congressional watchdog agency said.
A longstanding option for student loan borrowers has been to enroll in a payment plan that aligns payments with their income – so called income-driven repayment plans. Some people with those plans, however, have struggled to get credit for all of the payments they have made. Others who were eligible never participated.
The borrowers involved in the plans targeted for the new forgiveness include those with Direct Loans or Federal Family Education Loans held by the department, including Parent PLUS loans. Many of the borrowers affected are likely 50 or older. About 9.2 million borrowers fall into this category.
Neither the Education Department nor the New Civil Liberties Alliance immediately responded to a request for comment.
