Judge pauses Sec. of Education’s third attempt at student loan forgiveness

(The Center Square) – U.S. District Court Judge J. Randal Hall issued a temporary restraining order Thursday against U.S. Secretary of Education Miguel Cardona to stop a third attempt at forgiving student loans.

“… Defendants are restrained from mass cancelling student loans, forgiving any principal or interest, not charging borrowers accrued interest or further implementing any other actions under the Rule or instructing federal contractors to take such actions,” Judge Randal wrote in a six-page order. “This Order applies to all of Defendants’ officers, agents, employees, attorneys, and other persons in active concert or participation with them.”

The order is in effect for 14 days. A video conference hearing was scheduled for Sept. 19 by Judge Randal, who was nominated by President George W. Bush in 2007 and confirmed by the U.S. Senate in 2008.

Judge Randal wrote a temporary restraining order request must show a substantial likelihood of success on the merits. Those requesting the order also must show irreparable injuries will be suffered if the injunction isn’t issued, the threatened injury outweighs the arm of the order and the action wouldn’t be adverse to the public interest.

Seven Republican attorneys general filed a lawsuit on Tuesday requesting an immediate emergency temporary restraining order, but no later than Friday. The lawsuit alleges a recent discovery of documents showing Cardona is “unlawfully trying to mass cancel hundreds of billions of dollars of loans and has quietly instructed federal contractors to ‘immediately’ begin cancellation as early as Sept. 3 (but possibly beginning on Sept. 7),” according to the complaint.

“Today is a huge victory for every working American who won’t have to foot the bill for someone else’s Ivy League debt,” Missouri Republican Attorney General Andrew Bailey, who was appointed by Republican Gov. Mike Parson and is running for the seat in November, said in a statement.

Republican attorneys general in Alabama, Arkansas, Florida, Georgia, North Dakota, and Ohio joined Missouri in the lawsuit.

One exhibit in the lawsuit found an email template to be sent to borrowers.

“The Department has instructed servicing organizations that, after cancelling loans, they must send these pre-written emails, which state at the very top of each email, ‘Congratulations! The Biden-Harris Administration has forgiven a portion of your federal student loan(s) listed below with [SERVICER NAME],’” according to the lawsuit.

Judge Randal agreed Missouri would be financially harmed as the Higher Education Loan Authority of the State of Missouri (MOHELA) would lose revenue if student loans were forgiven. MOHELA operating surpluses fund the state’s college and universities.

“Further, the harm is irreparable because ‘the States cannot turn back the clock on any loans that have already been forgiven,’“ Judge Randal wrote, quoting a previous case.

The lawsuit alleges Cardona began the legal process of forgiving billions in student loans in May.

The lawsuit claims Cardona published in May a notice of a new rule to provide a waiver for specific student loan debts and limited the comment period to 30 days. The complaint states this would be a major rule change, requiring a 60-day comment period under federal regulations.

“Yet despite not formally publishing their Third Mass Cancellation Rule, defendants have already quietly instructed the half-dozen loan-servicing organizations that contract with the federal government to immediately start cancelling loans and balances beginning as early as this week and to fully implement the Third Mass Cancellation Rule by Sept. 20,” according to the complaint.