Georgia dismissed from student loan lawsuit

A federal judge on Wednesday dismissed the state of Georgia from a multi-state lawsuit challenging the legality of the Biden administration's latest student loan cancelation plan. U.S. District Judge J. Randall Hall also chose to move a lawsuit against the plan from Georgia to Missouri. In the process, the judge opted not to extend a preliminary injunction preventing the administration from putting the loan cancellation plan into effect, allowing it to expire on Thursday. But plaintiffs are already asking the new court to rule tomorrow on whether it will leave the ban in place, Reuters reported. If the judge does not extend the preliminary injunction, the Biden administration can cancel student loan debt that states and the federal government are not currently taxing.

What’s this about Georgia getting dismissed from the lawsuit? Georgia and Missouri filed a joint lawsuit against the Biden administration’s plan in a Georgia-based federal court in Georgia. Georgia claimed it would be taxing the student loans affected by the loan starting in 2026 and therefore the plan would result in loss of tax revenue. But U.S. District Judge J. Randall Hall ruled that any lost revenue to Georgia would be self-inflicted, since the loss would be the result of Georgia’s own tax policies, rather than the loan forgiveness plan itself. The judge also ruled that since Georgia wasn’t currently taxing student loans due to prohibitions put in place by the American Rescue Plan, and since the state couldn’t prove the loans would still be there to tax in 2026 after those prohibitions have expired, it lacked standing to challenge the plan. The judge ordered that the case be transferred to a federal court in Missouri and dismissed Georgia from the lawsuit.

How many people could this Biden administration plan affect? The plan could affect three out of every four student loan holders—or 32 million borrowers—according to the Center for American Progress. The Supreme Court struck down a Biden administration student loan forgiveness plan last year. Since then, the administration has tried other methods for canceling borrowers’ student loans. But those new efforts have also faced legal challenges.

Dig deeper: Listen to Myrna Brown’s report on The World and Everything in It podcast about issues related to FAFSA.