A federal court just dealt a blow to 30 million student-loan borrowers by blocking Biden from carrying out his second try at broad debt cancellation

• A federal court temporarily blocked Biden from carrying out his second try at broader student-debt relief.
• It comes two days after a group of GOP-led states filed a lawsuit to block the relief.

The legal setbacks keep coming for millions of federal student-loan borrowers.

On Thursday, Georgia's southern district court placed a temporary restraining order on President Joe Biden's second try at broader student-loan forgiveness using the Higher Education Act of 1965.

This order comes just two days after a group of seven GOP state attorneys general filed a lawsuit to block the new relief plan before it was even finalized, arguing in their lawsuit that the Biden administration was violating regulatory procedure by making plans to implement the relief ahead of schedule.

Internal documents obtained by the states and attached alongside the lawsuit show an Education Department memo to the servicer MOHELA saying, "In September of 2024, the Biden-Harris Administration will launch the Federal Student Loan Debt Initiative."

The six-page order stated that Biden is "temporarily restrained from implementing the Third Mass Cancellation Rule," and the administration is additionally restrained "from mass canceling 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."

To obtain a temporary restraining order, the ruling said states have to show how they would suffer harm from the challenged policy. The ruling said that the GOP-led states satisfied that requirement because of their arguments that the relief would harm the revenues of student-loan company MOHELA, an instrument of the state of Missouri, one of the states that also joined the lawsuit.

The Education Department did not immediately respond to a request for comment from Business Insider on the latest ruling. A spokesperson previously told BI after the lawsuit was filed on Tuesday that the department "remains committed to supporting borrowers and fighting for affordable repayment options and relief for those who qualify."

The plan was set to go into effect in October. Given this ruling, the timeline is now unclear for when or if relief will reach over 30 million borrowers as the legal process progresses.

Some Republican lawmakers lauded Thursday's court decision. Sen. Bill Cassidy, the top Republican on the Senate education committee, wrote on X that "the admin knows they lack the legal authority for this, but this is their attempt to buy votes."

Many of Biden's key student-debt relief policies have faced legal challenges. Last summer, the Supreme Court struck down Biden's first attempt at broad debt relief, and more recently, a federal court blocked the Education Department from implementing Biden's new SAVE income-driven repayment plan, intended to give borrowers lower monthly payments and a shorter timeline to debt relief.

These legal challenges have left millions of borrowers in limbo, with uncertainty regarding the future of their student-loan payments and any potential relief as they wait for a final court decision.