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U.S. District Judge J. Randal Hall on Thursday temporarily blocked the Biden administration's latest student debt relief plan in a lawsuit brought by seven Republican-led states (Missouri, Georgia, Alabama, Arkansas, Florida, North Dakota and Ohio).
The Details: Judge Hall issued a temporary restraining order after Republican state attorneys general filed a lawsuit to block a rule the Education Department proposed which would allow it to provide full or partial deft relief to certain types of borrowers.
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The judge determined that the suit had established a likelihood of proving the Education Department lacked authority to cancel student loans.
“This is especially true in light of the recent rulings across the country striking down similar federal student loan forgiveness plans,” Hall wrote.
Last week, the U.S. Supreme Court rejected a Biden administration plea in a separate case that sought to revive the Savings on a Valuable Education (SAVE) plan to provide relief to borrowers with federal student loan debt.
Why It Matters: The court’s denial is potentially a positive development for student loan providers including SoFi Technologies, Inc. (NASDAQ:SOFI), Navient Corp (NASDAQ:NAVI) and SLM Corporation (NASDAQ:SLM). Student loan providers would lose revenue in the form of interest payments and loan origination fees if student loan forgiveness or deferment resulted from a debt relief plan.
SOFI, NAVI, SLM Price Action: According to Benzinga Pro, SoFi Technologies shares ended Thursday's session down 2.94% at $7.26, Navient shares closed down 0.25% at $15.99 and SLM shares ended Thursday 0.99% lower at $20.93.
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