Saturday, July 01, 2023

Missouri company plays central role in downfall of Biden loan forgiveness program


By Annelise Hanshaw

At the center of the U.S. Supreme Court decision striking down Joe Biden’s student loan forgiveness program on Friday was a little-known Missouri nonprofit that goes by MOHELA.

Based in St. Louis, the Missouri Higher Education Loan Authority is a quasi-governmental entity created by state lawmakers in 1981 to service student loans.








And when former Missouri Attorney General Eric Schmitt (pictured) went looking for legal standing in order to bring a lawsuit challenging the president’s program, he relied on the relationship between the state and MOHELA — even though the company wanted nothing to do with the lawsuit.

On Friday, the six conservative justices on the U.S. Supreme Court agreed with Schmitt that, despite the company’s reluctance, MOHELA gave Missouri standing to sue. The court then struck down the program, with Chief Justice John Roberts accusing the executive branch of a power grab over the legislature.

“Today, we have concluded that an instrumentality created by Missouri, governed by Missouri, and answerable to Missouri is indeed part of Missouri; that the words ‘waive or modify’ do not mean ‘completely rewrite;’ and that our precedent — old and new — requires that Congress speak clearly before a Department Secretary can unilaterally alter large sections of the American economy,” Roberts wrote.

The ruling affects more than 777,000 Missourians with federal student loans who would have received $10,000-$20,000 of relief under the proposal.

In addition to Schmitt, five other attorneys general from Arkansas, Iowa, Kansas, Nebraska and South Carolina filed the case in the U.S. District Court for the Eastern District of Missouri, seeking to bar the Secretary of Education from providing student loan relief.

The attorneys general argued the secretary didn’t have authority and the forgiveness program would hurt state tax revenue.

The Supreme Court had to decide whether Missouri’s attorney general could sue on behalf of MOHELA before determining the validity of the loan relief.

The district-court judge dismissed the case, saying MOHELA can represent itself in litigation. But the Supreme Court reversed that decision, finding that MOHELA is an “instrumentality of Missouri.”

“The secretary’s plan will cut MOHELA’s revenues, impairing its efforts to aid Missouri college students. This acknowledged harm to MOHELA in the performance of its public function is necessarily a direct injury to Missouri itself,” Roberts wrote.

Some predict that debt cancellation would increase MOHELA’s revenue. Projections from the Roosevelt Institute show a steep increase as MOHELA takes over federal loans dropped by other servicers and is paid for each cancellation.

The dissenting opinion, written by Justice Elena Kagan, said MOHELA qualifies as a third party, not an arm of the government. Thus, Missouri had no standing to bring the lawsuit, she argued.

“If MOHELA had brought this suit, we would have had to resolve it, however hot or divisive. But Missouri? In adjudicating Missouri’s claim, the majority reaches out to decide a matter it has no business deciding. It blows through a constitutional guardrail intended to keep courts acting like courts,” Kagan wrote.








Although MOHELA is named 85 times in the court’s opinion, the nonprofit’s employees were opposed to the loan servicer’s inclusion, as recently revealed by the Student Borrower Protection Center.

This month, the SBPC released internal MOHELA emails it obtained through Missouri’s Sunshine Law showing employees discussing the case, with some confused at the organization’s inclusion in the lawsuit.

“Are we the bad guys?” one asked.

“The MO state AG needed to claim that our borrowers were harmed for standing, so they’re making us look bad by filing it not only with MO on it, but especially bad because they filed it in MO,” another employee wrote.

In October, U.S. Rep. Cori Bush sent a letter to MOHELA’s executive director Scott Giles and asked for the company’s stance on the attorney general’s lawsuit and accused MOHELA of being involved.

MOHELA had been largely silent up to that point.

“​​In Missouri alone, your efforts to halt cancellation could rob Missouri families — particularly Black and brown families who are disproportionately impacted by the student debt crisis — of more than $12.7 billion in life-changing economic relief,” Bush wrote.

MOHELA responded to Bush’s letter by distancing itself from the litigation. It informed the congresswoman that it was not involved in the decision to file the federal case.

“MOHELA has not had, and does not have, a contractual relationship or agreement with the Missouri Attorney General’s Office on any topic including as to student debt relief. The only communications between MOHELA and that office as it relates to student debt relief, is that the office recently filed a series of sunshine law requests on MOHELA seeking copies of documents relative to MOHELA’s federal loan servicing contract,” the company wrote in a letter to Bush.






 

Attorneys argued that loan cancellations would deprive MOHELA from the interest it would otherwise receive. Bush asked the organization about its capacity to serve as the Public Service Loan Forgiveness (PSLF) program servicer.

MOHELA took over the PSLF program July 1, 2022, after the former servicer resigned. These loans are not the Federal Student Aid contested by the attorneys general and are actively being forgiven.

MOHELA said it had “available funds in excess of operating expenses” with its reserves dedicated to student financial aid.

“We are committed to meeting the expectations and requirements as directed and administered by Federal Student Aid,” it said.

Federal student loan relief isn’t new. The secretary of education has paused student loan payments during national emergencies historically through the Higher Education Relief Opportunities for Students Act of 2003, or HEROES Act.

In March 2020, then-Secretary of Education Betsy DeVos chose to use this precedent to stop payments and the accrual of interest during the effects of the COVID-19 pandemic.

As federal employees in the Biden Administration looked toward the resumption of loan payments, they learned that Americans were at a higher risk of delinquency and faced economic pressures, the secretary of education said in litigation..

The Department of Education decided that $10,000 in relief, and $20,000 for Pell Grant recipients, would keep delinquency rates at or below pre-pandemic levels.








The secretary of education was planning to use the HEROES Act to forgive the payments, but Friday’s Supreme Court decision found that would be beyond the scope of the act. The secretary said he is allowed to “modify” the HEROES Act, but Roberts wrote that the widespread student-loan forgiveness was beyond a simple edit.

Schmitt, who was elected to the U.S. Senate in November, wrote on Twitter he was “proud to have brought this case.”

“Working folks who paid off their loans or took another path shouldn’t have to pay for the unpaid loans of the tenured college professor,” he said.

Kansas City Mayor Quinton Lucas said on Twitter that the ruling showed a commitment to inequality.

“On eliminating student loan relief, the Supreme Court again shows its activist stripes,” he wrote, “working overtime to protect the wealthy, erase opportunity for the poor, and to build permanent inequality, harming the chance for millions to build their lives free of burdensome debt.”

13 comments:

  1. Anonymous10:35 AM

    Thank goodness, now get a job with your degree, and remember you signed a contract to pay it back

    ReplyDelete
  2. Anonymous2:49 PM

    Good for them! People should pay back money they willingly borrowed and promised to pay back. Failing to do so is nothing less than theft.

    ReplyDelete
  3. Anonymous4:35 PM

    Good thing all the 4 corners republicans that took the PPP covid loans paid them back.

    Right?

    Otherwise they'd be hypocrites!

    ReplyDelete
    Replies
    1. Anonymous6:36 AM

      Good thing ppp loans and student loans are completely different things. Strawman arguments are weak. If the conditions were met, then the obligations were fulfilled.
      I paid my student loans back, I have no obligation to pay anyone else's.

      Delete
  4. Anonymous4:50 PM

    I hope yall are wanting all those businesses to pay back their ppp loans.

    ReplyDelete
  5. Anonymous10:47 PM

    Time to learn what everyone else already knows. There is no such thing as a Free Ride AND You are NOT Special AND No one Owes You Anything.

    ReplyDelete
  6. Anonymous9:32 AM

    One things for sure:

    if you are white and vote Republican and own a business, when the government gives you free money it isn't called welfare!

    or Free Ride

    or because You are Special

    or because You are Owed Something.

    It's just a complete coincidence that your best bought buddy legislators pass the laws that get you paid!


    And freeedum!

    ReplyDelete
  7. Anonymous12:12 PM

    So where are my Democrat friends that have already paid back your thousands of dollars in student loan debt??? How come you are happy with paying off the debt that others have contractually signed up for themselves?

    As for the PPP loans. You just show your ignorance in how that loan/grant works when you bring this into the conversation!!

    Prov 17:27(NIV) The one who has knowledge uses words with restraint, and whoever has understanding is even-tempered.

    ReplyDelete
  8. Anonymous12:40 PM



    No discussion of

    "Why Four Corners welfare for white Repubulicans isn't really wlefare at all"

    could be complete without a talibangelical dropping bible verses to support their babbling.

    ReplyDelete
  9. Anonymous4:40 PM

    Simple fact is, it was never going to happen. It's unconstitutional. The President cannot cancel debt, congress controls the purse. The Dems knew that all along, they needed another issue to get young people out to vote in the midterns. To their credit, it worked. They will carry this over into 2024 now, but it still won't happen.
    The political will isn't there. The treasury needs that interest on the student debt. Get used to paying it.

    ReplyDelete
  10. Anonymous3:15 PM

    4:40 PM You are SPOT ON. Biden says that he will look for "other avenues" for student debt cancellation - but those "avenues" will also get challenged in court - since the President cannot cancel debt (as you stated 4:40 PM).

    ReplyDelete
  11. Anonymous9:26 AM

    Anonymous at 440pm is correct. Good comment. Informed by facts and logic, and the law.

    The Court found there was standing for Missouri and MOHELA and the article by the 'Independent' is another in a series of anti-GOP pieces. Now they are trashing MOHELA.
    The Independent is not Independent but always slants sharply to the left.
    Many Dem pols including Biden and Pelosi have said repeatedly the President does not have the constitutional authority to strike down these loans.
    Kudos to former AG and current MO Senator Eric Schmidt.
    A fighter for the truth, fearless, he has my vote.
    It was all a lie by the Dems to fool the young uninformed voters,and to get quick fix votes, knowing it was a false promise.
    Sound familiar? Dem playbook operation # 47-B.

    ReplyDelete
  12. Anonymous5:42 AM

    Our Country has gotten to the point where everyone has their - Hand Out. What happened to Working Hard to Achieve the American Dream - Instead of being on the Government Roles.

    I do believe that everyone has Hardships - - and everyone needs a Helping Hand at sometime or another - But to have Generations and be on a Lifetime of Governmental Support is Ridiculous. Their are Jobs - Out There - - GET TO WORK. So you should only be allowed to get Government Assistance for a Pre-Subscribed Period of time - and then you are on your own - Not a Lifetime of Living off the Government. No More Free Rides.

    Then our Political Parties - - Use these Handouts - as a Vote for Me - Democrats - Want to give away everything Free - Republicans - Want to try and be more Fiscally Sound - - Yet still have their Pet Projects that need Funded - When in essence this Free Money is REALLY CAUSING ALOT OF MINORITIES TO SPEND THEIR LIVES IN LIFE LONG POVERTY - - TRULY MAKING THEM A VICTIM OF THE SYSTEM -

    If you Borrow Money - - FOR ANYTHING - STUDENT LOANS, ETC., - PAY IT BACK - YOU ARE RESPONSIBLE - NO ONE TWISTED YOUR ARM TO TAKE OUT THE MONEY - - PAY IT BACK.

    Our Government does not make Money - ALL THEY DO IS PRINT MONEY - - The Government uses our Taxes to run the Government - - They should not be Allowed to JUST PRINT MONEY.

    We need to STOP PPP - BUSINESS LOAN - WHERE THE GOVERNMENT FORGAVE $400 BILLION DOLLARS, AND STIMULUS MONEY - - THIS IS MONEY THE GOVERNMENT JUST PRINTED.

    AS FOR STUDENT LOANS - THE COST TO GO TO COLLEGE IS TERRIBLE - - PEOPLE NEED TO REALLY THINK ABOUT HOW BORROWING THAT MUCH MONEY WILL IMPACT THEIR LIVES. You cannot Borrow a $150,000 to go to College - then Graduate and Start working a Job that Pays - $35,000 a Year - - and Pay for a Car / Someplace to Live, Etc., - It won't work...

    ReplyDelete