If Biden actually wants to cancel student debt, he must do one thing: terminate the federal government’s contract with the student loan servicer MOHELA.

President Joe Biden delivers remarks on student debt at Madison College, Wisconsin, April 8, 2024. (Kyle Mazza / Anadolu via Getty Images)

The Biden administration’s first attempt at administering student debt relief was blocked by the US Supreme Court in 2023. Last month, two separate federal judges halted parts of Joe Biden’s SAVE plan — a new repayment plan that would lower payments to $0 a month for millions of debtors while also pausing their interest. When Biden releases the official proposed rules of his “Plan B” of debt cancellation, they too will inevitably face legal challenges — and likely defeats.

Each of Biden’s efforts to relieve working families of the burden of crushing student debt have much in common. They’re all piecemeal, inadequate, means-tested, and slow to be administered. But worse, they’re destined to succumb to the same frivolous yet ultimately successful Republican court challenges leveraging a single student loan servicer as the deadly needle that threads a successful lawsuit against relief: MOHELA.

While the federal government owns the vast majority of student debt, they don’t actually service the debt. You cannot call the government to pay, negotiate, or inquire about your student debt in the way you can call the IRS about your taxes. Instead, the government pays hundreds of millions of dollars to private corporations to service student loans for them — and the corporations do a terrible job.

Every student loan servicer has been problematic, but the Higher Education Loan Authority of the State of Missouri — better known as MOHELA — has been an especially egregious servicer. When Biden resumed federal student debt payments this past October, MOHELA sent the wrong payment information to almost half a million people. According to a Department of Education memo, some borrowers got bills exceeding $10,000 a month — even bills for $100,000. Many borrowers who have never even given their bank information to MOHELA had their accounts overdrafted and were left with nothing. For borrowers seeking a rightful refund for MOHELA’s mistakes, the servicer’s projected time to return the money it stole stretches past a quarter of a year.

Additionally, MOHELA has engaged in a “call deflection” scheme for their own financial gain, keeping borrowers on hold for three, four, and sometimes ten hours at a time only to give borrowers the incorrect information. Even MOHELA’s own general counsel had concern about backlash should its internal “communications playbook” about “deflect[ing]” borrowers toward “incomplete online resources” become public.

Worse, MOHELA was the sole student loan servicer for borrowers under the Public Service Loan Forgiveness program. So public school teachers, nurses, public defenders, librarians, firefighters, and social workers have all been bearing the brunt of MOHELA’s incompetence and theft. MOHELA’s “mistakes” have been so bad that the Biden administration did something it had never done before: it punished MOHELA by withholding $7.2 million from its contract (a mere slap on the wrist, but a slap nevertheless).

As long as MOHELA exists, trillions of dollars for millions of people are in jeopardy.

MOHELA is arguably worse than all the remaining student loan servicers. But what makes it uniquely ripe for condemnation is how it has been used as a reliable pawn by the Republicans fighting student debt relief (or anything resembling it) in court.

Myriad bad actors have filed lawsuits against student debt relief, but only MOHELA’s bottom line has managed to stick as an actual claim to injury, as right-wing litigants insist MOHELA will lose money if borrowers get relief. This argument is absurd and hangs on a thick chain of fallacies, but has nevertheless passed muster in the judicial branch.

So far, lawsuits against student debt relief — because a debtor doesn’t want it or opposes the expansion of racial justice, for example, or a company chooses to deny its employees financial autonomy — haven’t stuck as a legitimate reason to sue in court. But where Barack Obama–appointed judges and a conservative Supreme Court have found agreement — silly though it may be — is that MOHELA’s precious profits must never be threatened.

What does this mean? Well, as long as MOHELA exists, there is still one serious and proven legal threat to your student debt relief, your less costly repayment plan, or anything the Biden administration attempts to do to relieve the pressure of student debt. As long as MOHELA exists, trillions of dollars for millions of people are in jeopardy.

Luckily for Biden and forty million student debtors, there is no real obligation to keep MOHELA around. They are owed nothing. That’s why the logical next step for the Biden administration is to simply terminate its contract with MOHELA — because its job performance is poor, but also because Biden simply shouldn’t reward MOHELA for being a pawn in Republican litigation against him. Paying a corporate entity to stand in the way of your executive actions is the exact opposite of savvy.

The Biden administration has repeatedly expressed a commitment to using “every tool” in its toolbox to bring debtors relief. But as long as MOHELA still has a contract with the Department of Education, every tool to cancel student debt will be destroyed the moment Biden tries to use it.

The Debt Collective, the nation’s first union of debtors, with which I am an organizer, has been the loudest drumbeater — alongside advocacy groups like the American Federation of Teachers and Student Borrower Protection Center — in pressuring Biden to fire MOHELA. Months ago, organizers at the Debt Collective disrupted the Student Loan Servicing Alliance’s conference where the executives of MOHELA and other servicers gathered to talk about, well, collecting debt. This disruption exposed many of the faces behind the mystery that is MOHELA for the first time, causing them to literally weep or disgustingly smirk in real time as they were confronted about their brazen financial abuse and attempts to skirt accountability.

https://x.com/StrikeDebt/status/1793981386980028759

Our chants, directed at MOHELA’s CEO, of “Scott Giles, you’re a thief — stop blocking debt relief!” echoed across a room of debt collectors who, ironically, seemed to be having their first interactions with real student loan borrowers. The day before, Senator Ed Markey, Congresswoman Ayanna Pressley, and nearly a dozen other members of Congress issued their first call on the Biden administration to terminate MOHELA’s contract.

But Biden (as well as some of his strongest centrist backers) has remained silent amid a dialogue around MOHELA’s antics, holding a bat at the plate while refusing to swing at the lobbed pitch of gutting a contract with a corporate burglar. This is a huge missed opportunity, especially for centrist Democratic voters who genuinely want to see more relief go through and are eager to champion Biden’s efforts thus far. Firing MOHELA may not be the silver bullet that guarantees borrowers win future legal challenges, but it would certainly deprive Republicans of their most damaging tool in blocking relief.

Firing MOHELA may not be the silver bullet that guarantees borrowers win future legal challenges, but it would certainly deprive Republicans of their most damaging tool in blocking relief.

Student debt cancellation — even just by nixing around 10 percent of the federal government’s outstanding balance — has arguably been President Biden’s strongest talking point heading into a heated election. And he knows it. With an average press release of every other week, it’s practically the first item on his first-term “accomplishment” fact sheet — and it’s one of the few items on a list of achievements that can get a silently protesting Morehouse commencement crowd to muster up an applause.

The reality is Biden’s round-two effort to administer student debt relief is likely dead on arrival because of the legal threat of the Missouri servicer, the only quasi-governmental servicer remaining that operates as a “public instrumentality.” If Biden is serious about student debt cancellation, he will have to remove the last barrier standing in its way: MOHELA. He should simply not pay a student loan servicer that blocks his own proposals.

While this may seem obvious, it will take a chorus of loud voices to break through and give future debt relief a fighting chance. Are you a center-left Democrat who defends Biden’s shaky record on student debt relief because you (understandably) see Donald Trump as a much worse alternative? Do you want the second attempt by Biden (or whoever takes his place) to deliver student debt relief to actually go through? Do you long to champion the gains on student debt relief Biden has made thus far and want his total-amount-canceled number to go up? Are you tired of the Left screaming that Biden hasn’t done enough on this issue? Are you Jim Clyburn or Joe Biden?

Then MOHELA is your perfect enemy. Destroy MOHELA and give student debt relief a chance.

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