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Right-Wing Supreme Court Keeps Pause on Biden's Student Debt Relief Effort
"I reckon the U.S. Supreme Court does not like millions of people being able to afford to make payments on their student loans," said one journalist who had benefited from the SAVE program.
Aug 28, 2024
Millions of student loan borrowers whose monthly payments had been reduced by U.S. President Joe Biden's latest attempt to achieve debt relief were thrown into limbo Wednesday as the right-wing majority on the Supreme Court ruled in favor of a sweeping suspension of the president's policy.
After several Republican-led states filed lawsuits against the Saving on a Valuable Education (SAVE) program, the U.S. Court of Appeals for the 8th Circuit ruled last month that the program should be paused while it evaluated the merits of the case.
The Biden administration had asked the high court to clear the way for SAVE to go back into effect, allowing 8 million Americans enrolled in the program to make monthly loan payments based on their incomes.
Mike Pierce, executive director of the Student Borrower Protection Center, said the Supreme Court "bought into the 8th Circuit's legal fiction that pausing affordable payments is 'preserving the status quo,'" issuing a ruling he denounced as "bullshit."
Under SAVE, which has already cleared debts for 400,000 borrowers, the Biden administration reduced monthly payments for undergraduate loans to 5% of the borrower's discretionary income, down from 10%. Loans of $12,000 or less were to be canceled after 10 years instead of 20-25 years, as long as the borrower made required payments.
The administration argued that the program was in accordance with a 1993 law allowing the secretary of education to establish "income contingent repayment" plans based on "the appropriate portion of the annual income of the borrower."
After the lower court's earlier ruling, Education Secretary Miguel Cardona said the court had rejected "a practice of providing loan forgiveness that goes back 30 years."
Ashton Pittman, an editor for the Mississippi Free Press, said the program had reduced his monthly student loan payments so that he was "finally able to reliably make them each month."
"But I reckon the U.S. Supreme Court does not like millions of people being able to afford to make payments on their student loans," said Pittman.
The Debt Collective, a national student loan borrowers union, suggested the latest ruling—which comes over a year after the Supreme Court struck down a broader student debt relief plan from Biden—shows that the fight for debt forgiveness cannot be won through the federal court system.
The Debt Collective has joined progressive lawmakers and other groups in calling for the Department of Education to cut ties with the Missouri Higher Education Loan Authority (MOHELA), which services federal student loans and which Missouri Attorney General Andrew Bailey said would lose revenue if student debt cancellation is allowed to move forward.
"Biden is losing in court because he is not being politically or legally savvy," said the group after the 8th Circuit ruling was announced. "He should fire MOHELA and issue cancellation swiftly and automatically through an executive order and issue pause."
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'Bombshell': Internal Docs Highlight Flaws in Student Debt Case Now Before Supreme Court
"These emails confirm what every honest observer has long understood: Missouri's lawsuit is just a partisan hack job aimed at getting the right-wing attorney general's name in the paper," said one expert.
Jun 16, 2023
As the U.S. Supreme Court nears a decision on President Joe Biden's student debt relief proposal, an advocacy group on Friday published internal records revealing the "anxiety and confusion" of staffers at a loan company critics say is being spuriously used by Republican attorneys general in their attack on the president's plan.
Internal documents from the Missouri Higher Education Loan Authority (MOHELA)—a private state-chartered lender—obtained by the Student Borrower Protection Center (SBPC) under Missouri's Sunshine Law show that agency employees were confused by then-state Attorney General Eric Schmitt's lawsuit and argument that Biden's relief plan could harm the company.
"MOHELA's own staff agree—the case currently before the Supreme Court that is holding up debt relief for tens of millions of borrowers lacks standing, and it should be tossed aside."
That dubious claim—an independent report showed that not only would MOHELA not be harmed by Biden's proposal, it would make more money—forms the purported basis for MOHELA's standing in the suit, Biden v. Nebraska. Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina are suing the administration, alleging that its debt forgiveness plan violates the U.S. Constitution's separation of powers and Administrative Procedure Act.
MOHELA is not even a plaintiff in the case, a fact that critics including progressive U.S. Rep. Cori Bush (D-Mo.) have cited in calling for the dismissal of the suit—one of two student debt relief cases the high court is expected to rule on sometime this month.
"These emails confirm what every honest observer has long understood: Missouri's lawsuit is just a partisan hack job aimed at getting the right-wing attorney general's name in the paper," Ella Azoulay, SBPC's research and policy analyst, said in a statement.
"MOHELA's own staff agree—the case currently before the Supreme Court that is holding up debt relief for tens of millions of borrowers lacks standing, and it should be tossed aside," Azoulay added.
\u201c\ud83d\udea8Bombshell\ud83d\udea8\n\nInternal emails from MOHELA show that even MOHELA says the lawsuit in front of SCOTUS to kill student debt cancellation should be dismissed for lack of standing & that MOHELA isn't harmed by cancellation\u201d— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1686945609
"Just out of curiosity, is MOHELA apart [sic] of the lawsuit going on to prevent the loan forgiveness?" wrote one employee in an email. "Are we the bad guys?”
Another staffer wrote that Schmitt's lawsuit "has nothing to do with us, except that they're using the [Missouri] consumers harm as standing."
Indeed, in an October 2022 letter to Bush—who had inquired about the lender's relationship with the attorney general's office—MOHELA said its "executives were not involved in the decision" by Schmitt to sue the Biden administration.
\u201cThe lawsuit against student debt relief was filed by the state of Missouri, saying student loan servicer MOHELA was financially harmed (they weren't). But NEW internal documents by MOHELA staff show even *they* think the lawsuit lacks legal standing.\n\nSCOTUS could rule next week.\u201d— Braxton \ud83d\udfe5 (@Braxton \ud83d\udfe5) 1686947409
"I think MOHELA was opposed to this move, but couldn't do anything about it," wrote yet another staffer. "The Mo. state AG needed to claim that our borrowers were harmed for standing, so they're making us look bad by filing this not only with Mo. on it, but especially bad because they filed it in Mo."
During oral arguments in February, the Supreme Court's right-wing supermajority signaled it is poised to side with Republicans challenging the debt cancellation program and strike it down.
Last week, a trio of progressive U.S. lawmakers—Reps. Ro Khanna (D-Calif.), Alexandria Ocasio-Cortez (D-N.Y.), and Ayanna Pressley (D-Mass.)—implored the Biden administration to have a backup plan to aid student borrowers if the Supreme Court kills its debt cancellation proposal.
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Bombshell Report Exposes Key Argument Against Student Debt Relief as 'Categorically False'
"The Supreme Court risks making a ruling affecting millions of people's lives without essential, accurate information," warns a new analysis from the Roosevelt Institute and the Debt Collective.
May 03, 2023
The argument at the center of Republican officials' case against President Joe Biden's student debt cancellation plan is "categorically false," according to an explosive new report released Tuesday by the Roosevelt Institute and the Debt Collective.
With debt relief for tens of millions of people hanging in the balance, the GOP state officials who brought the case told Supreme Court justices in late February that they have legal standing to challenge the Biden administration's student debt cancellation plan because if it took effect, it would "cut MOHELA's operating revenue by 40%."
MOHELA is Missouri's state-created higher education loan authority, and the supposed financial harms it would suffer under the student debt cancellation plan are critical to the right-wing officials' case. If the Republican plaintiffs can't prove that MOHELA—which is not itself a plaintiff in Biden v. Nebraska—would suffer concrete harm from student debt cancellation, their case falls apart.
According to the new report by the Roosevelt Institute and the Debt Collective, not only would MOHELA not be harmed by the Biden administration's student debt relief plan—it would actually see its direct loan revenue rise if the plan is enacted.
"Our new research examining this claim suggests that MOHELA's year-over-year revenue from direct loans will actually increase substantially, even after debt relief," the report states. "Assuming President Biden's proposed cancellation goes through, we estimate that MOHELA will service more than twice the number of accounts it serviced at the beginning of the Covid payment pause. It will also earn nearly twice as much revenue servicing federal direct loans as it has in any year prior to cancellation."
The groups said their findings were bolstered by internal MOHELA documents that they obtained through a public records request. MOHELA's "own internal impact analysis," the report notes, "shows it would make more revenue the first year after cancellation is processed than it did in 2022 or any prior year."
"The entire premise of the lawsuit against student debt relief rests on the idea that 43 million student debtors shouldn't get relief for which they were already approved because one of the corporations contracted by the government to collect student debt, and thus the state of Missouri, will be financially harmed in the process," the report concludes. "Our analysis reveals this assertion to be false. In contrast, MOHELA will earn higher revenue than ever before, even after cancellation is administered—contradicting the plaintiffs' argument and calling into question their claims to standing."
Thomas Gokey, a co-founder of the Debt Collective and an author of the report, told The Lever on Tuesday that "it's really hard to stop student debt cancellation because you need to find someone who is harmed by it" to establish standing to sue.
"And the truth is, nobody is actually harmed by student debt cancellation," said Gokey. "It benefits everybody. It benefits people who don't have student debt."
\u201cNEW: The lawsuit against student debt relief claimed student loan servicer MOHELA would lose financial revenue and harm the state of Missouri.\n\nWe FOIA'd MOHELA's financial documents and this is simply false. After cancelation, MOHELA will earn *more* revenue than ever before.\u201d— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1683031420
Biden v. Nebraska, one of two student debt cancellation cases currently before the Supreme Court, has been placed on a fast track, meaning that "the Republican attorneys general trying to stop student debt cancellation for 43 million borrowers have at no point been obliged to verify the basic facts of this case," the Roosevelt Institute and the Debt Collective stressed.
"As a result, the Supreme Court risks making a ruling affecting millions of people's lives without essential, accurate information," the progressive groups said.
The report also highlights that, as part of its contract with the Department of Education, "MOHELA agreed not to 'object to or protest [Federal Student Aid's] allocation or reallocation of existing borrower loans, and further waives and releases all current or future claims against [FSA]... regarding its current allocation decisions and methodology for existing borrower loans.'"
"Maybe that's why MOHELA never joined the lawsuit," The American Prospect's David Dayen suggested in his write-up of the new report. "But none of that matters to this Supreme Court. They are on the verge of accepting a standing argument of a fake plaintiff who never joined the case, based on an assertion of harm that in the final analysis is actually a benefit, while ignoring a signed contract that flatly prohibits the fake plaintiff from suing at all."
"I know we're in a post-fact era, but this is really something," Dayen continued. "If the court doesn't pay careful attention to this report, more than 40 million student borrowers could experience continued financial hardship because the justices would rather violate numerous principles of jurisprudence than let Joe Biden help anyone. The conservatives on the court are obviously not mathematicians or experts in student debt servicing or financing. But they don't appear to be judges, either, at least in the sense of following the law."
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