Student Borrower Protection Center Leadership Call on President Biden to Extend Payment Pause Until He is Able to Cancel Student Debt for 40 Million Americans
November 15, 2022 | WASHINGTON, D.C. — A panel of judges in State of Nebraska et. al. v Biden granted the motion by six Republican-led states to block President Biden’s plan to cancel up to $20,000 in student debt for tens of millions of federal student loan borrowers. These states sought a preliminary injunction, arguing that debt cancellation must be stopped because the profits of lenders and servicers, like student loan giant Missouri Higher Education Loan Authority (MOHELA), were more important than—and threatened by—the Administration’s efforts to ensure the financial well-being of millions of Americans saddled with student loan debt in the time of a national emergency. The Administration has argued that this cancellation of debt is critical to ensure that student loan borrowers are not harmed as it ends the payment pause.
“Another day, another set of Trump judges playing political games with student loan borrowers’ financial lives,” said SBPC executive director Mike Pierce. “This decision is a tragic reminder of the tightening grip that big businesses and special interests have on our legal system. The Biden Administration must use this decision as an opportunity to make it clear that the student loan system will remain shut off as long as these partisan legal challenges persist.”
“It is disappointing to see this panel on the side of protecting the speculative profits of lenders and servicers and their wealthy executives over the needs of struggling student loan borrowers,” said SBPC deputy executive director and managing counsel Persis Yu. “This decision held that Missouri is harmed by President Biden’s debt relief program because MOHELA—a major federal loan servicer—might lose money when borrowers get debt relief. It is MOHELA’s job to carry out the federal student loan program and help borrowers pay off their debt—not obstruct 40 million borrowers from life-changing relief. As a result of this injunction, more than 750,000 student loan borrowers in the state of Missouri risk losing nearly $13 billion in debt relief. We urge the Plaintiffs to drop this frivolous suit and put the interests of the borrowers in their states and across the country above those of lenders and special interests.”
Background
On September 29, 2022, Missouri Attorney General Eric Schmitt, joined by Republican attorneys general in Kansas, Nebraska, South Carolina, and Arkansas, along with the Solicitor General of Iowa, filed a lawsuit in federal court in the Eastern District of Missouri seeking to block President Biden’s effort to cancel up to $20,000 in student debt for 40 million Americans. This lawsuit alleges that the State of Missouri, speaking on behalf of MOHELA, is suffering ongoing, irreparable harm due to increased “compliance costs” to the state-backed student loan company and the prospect of “imminent loss of revenue” should fewer Americans owe student loans. In effect, a state-backed student loan company hired to act as a federal contractor is asserting it has standing to veto federal student loan policy nationwide in order to protect its profits.
On Wednesday, October 12, 2022, a federal judge heard oral arguments to consider whether to grant MOHELA’s motion to block student debt relief for tens of millions of people. That judge denied the motion and dismissed the case. The plaintiffs appealed to the 8th circuit and motioned for an emergency injunction pending the appeal. That injunction was granted yesterday.
A copy of the complaint in Nebraska, Missouri, et. al. v. Biden is available here:
https://storage.courtlistener.com/recap/gov.uscourts.moed.198213/gov.uscourts.moed.198213.1.0_1.pdf
A copy of the reply brief filed by the U.S. Department of Justice is available here:
https://storage.courtlistener.com/recap/gov.uscourts.moed.198213/gov.uscourts.moed.198213.27.0.pdf
Recorded arguments in Nebraska, Missouri, et. al. v. Biden from October 12th, available here: https://www.youtube.com/channel/UCIWD5tA9DvZskM37uuuPBMg/
Cease and desist letter from American Federation of Teachers, AFL-CIO (AFT) and the Student Borrower Protection Center (SBPC) to student loan giant MOHELA for unlawful loan servicing practices: Missouri-Based Student Loan Giant Accused of Illegal Scheme to Block Student Debt Relief for Millions of Borrowers
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About Student Borrower Protection Center
The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.