A federal judge has dealt a blow to the Biden administration’s student loan forgiveness efforts. U.S. District Judge J. Randal Hall on Thursday temporarily blocked the latest student debt relief plan in a lawsuit brought by seven Republican-led states. The plan aimed to provide full or partial debt relief to certain types of borrowers.
The judge, siding with the states, ruled that the Education Department likely lacked the authority to implement the plan. This decision aligns with previous rulings across the country that struck down similar student loan forgiveness initiatives. Notably, the U.S. Supreme Court recently rejected the Biden administration’s attempt to revive a separate student loan relief plan known as SAVE.
This setback for the administration could benefit student loan providers like SoFi Technologies, Inc. (SOFI), Navient Corp (NAVI), and SLM Corporation (SLM). These companies stand to lose revenue in the form of interest payments and loan origination fees if student loan forgiveness or deferment plans are implemented.
Following the judge’s ruling, SoFi Technologies shares closed down 2.94%, Navient shares closed down 0.25%, and SLM shares closed down 0.99% on Thursday.
The outcome of this legal battle remains uncertain, but it represents a significant obstacle for the Biden administration’s push to provide relief to student loan borrowers.
