A federal judge has dismissed a lawsuit aimed at halting $39 billion worth of student loan forgiveness for over 800,000 borrowers.
Judge Thomas Ludington, presiding over the Eastern District of Michigan’s Northern Division, issued a ruling on Monday deeming the lawsuit brought forth by the Cato Institute and the Mackinac Center for Public Policy without standing, resulting in its dismissal as per the court’s documentation. The New Civil Liberties Alliance (NCLA) initiated the lawsuit on August 4 on behalf of these two organizations against the U.S. Department of Education and Education Secretary Miguel Cardona. The lawsuit was filed in response to the revelation that more than 804,000 borrowers would receive automatic forgiveness of $39 billion in student debt.
“Three days after filing their Complaint, Plaintiffs filed an ex parte motion for a temporary restraining order, seeking to prevent the Department from crediting qualifying borrowers’ accounts under the Adjustment,” the ruling form Ludington read. “But Plaintiffs have not shown a redressable injury caused by Defendants, so their Complaint will be dismissed without prejudice for lacking Article III standing and their motion will be denied as moot.”
At the end of June, the Biden administration adopted a program called Saving on a Valuable Education (SAVE) Plan, which allows certain borrowers to alter repayment plans and was the target of the organization’s lawsuit.
Under the SAVE Plan, a “12-month ‘on-ramp’ to repayment” would be implemented, which would allow borrowers who may have missed a monthly payment between Oct. 1, 2023, and Sept. 30, 2024, to not be considered “delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies,” according to the White House website.
Ludington’s ruling comes after the Supreme Court ruled 6-3 June 30 that in the case of Biden v. Nebraska, the Biden administration had adopted an unlawfully broad interpretation of the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 in order to forgive student debt loans. In the case, the Supreme Court found that the DOE could not forgive $10,000 in student loan debt for borrowers and needed congressional approval to do so.
