Judge to rule this month if Biden's student loan plan can go forward

A court case that could have a major impact on President Biden's student loan forgiveness plan will likely be decided next week.

A federal judge is expected to rule on a legal challenge to Mr. Biden's student debt plan from six GOP-led states by October 12, Washington Post reporter Danielle Douglas-Gabriel told CBS News. If the judge places an injunction on Biden's move, it "may create a stall or halt to this policy," she said.

The lawsuit, filed in September by attorneys general in Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina, argues that taxpayers shouldn't be saddled with paying the debt of other Americans who opted to go to college and now can't repay their loans. 

"Everyone's paying attention for the next week or so to see what will come out of that case," Douglas-Gabriel said.  

The Biden administration said in August that it will forgive up to $10,000 in student debt for individuals who makes less than $125,000 a year or couples who make less than $250,000 a year combined. People who received Pell grants would be eligible for an additional $10,000 in relief under Mr. Biden's plan, which doesn't include private debt.

About 43 million borrowers will benefit from the debt forgiveness portion of the plan, Mr. Biden has said. Nearly 20 million people will have their debt fully canceled, the White House said in August. 

The Biden administration's student debt program also faces other legal challenges. The Pacific Legal Foundation of California filed a suit last month, alleging that Mr. Biden is overreaching his powers as president and creating a tax liability for some Americans who accept the forgiveness.

Student loan debt waived under Mr. Biden's plan would be factored into state taxes for residents in Arkansas, California, Minnesota, Mississippi, North Carolina and Wisconsin. 

Arizona Attorney General Mark Brnovich on September 29 filed another lawsuit against Mr. Biden's student debt relief plan. 

Americans owe a record $1.7 trillion in student loans, according to Federal Reserve data. Payments on those loans have been paused for the past two years because of the coronavirus pandemic, but are set to restart January 1.