HomeUS News updateMissouri's student loan corporation could help doom Biden's debt relief plan

Missouri’s student loan corporation could help doom Biden’s debt relief plan

WASHINGTON — Ellen Weber could shave some of the more than $100,000 she has in student loans if President Joe Biden’s debt relief plan ever takes effect, but Republican officials in her home state of Missouri are working hard to make sure she does. That this will not happen.

Weber, 36, a therapist at a middle school just outside St. Louis, would be eligible for loan forgiveness of up to $10,000 under Biden’s proposal, which faces a showdown in the US Supreme Court on Tuesday.

Her loan is served by the Missouri Higher Education Loan Authority, known as MOHELA, which could play a key role in the litigation.

The judges will analyze two separate legal challenges to Biden’s plan, one of which involves Missouri. And part of the case will hinge on whether the state of Missouri, run by Republican officials, has standing to challenge Biden’s proposal, given Mohela’s role in servicing student loan debt and arguing that if the loan If it is forgiven then it will be lost.

The state’s involvement doesn’t sit well with Weber, who believes Republican state officials, including newly appointed Attorney General Andrew Bailey, haven’t considered the needs of state residents like him.

“To hear that the state is fighting against my interests and the interests of other people who would benefit from it is incredibly disappointing,” she said in an interview. Weber took out the loan so that she could complete a master’s degree in social work. The payments she made haven’t reduced the principal, meaning her total debt is higher now than it was a decade ago.

“It’s incredibly important that we recognize the inherent unfairness of that system,” she said.

Ellen Weber with her daughter, Lillian Weber-Santoularia.
Ellen Weber with her daughter, Lillian Weber-Santoularia.Courtesy Ellen Weber

Most experts believe that if the Supreme Court finds that at least one challenger has standing (meaning the challenger can demonstrate that it would be harmed by the proposed legislation), The court’s 6-3 conservative majority would then conclude that the program is illegal.

“Standing up is important,” said Ilya Somin, a professor at George Mason University’s Antonin Scalia Law School. Referring to the Biden administration’s legal arguments in defense of the proposal, he said it appears as if the government has “put most of its eggs in the standing basket,” as it considers it difficult to convince the court that the program is valid on any other basis. is valid will be a difficult hurdle to overcome.

The court is hearing two cases, one brought by six states including Missouri, and another brought by two people, Myra Brown and Alexander Taylor, who have student loan debt.

Challengers argue that the administration’s plan — announced by Biden in August and originally scheduled for last fall — violates the Constitution and federal law, partly because it bypasses Congress, which he Said to have the power to make laws relating to student loan forgiveness.

The program, which would allow eligible borrowers to cancel up to $20,000 in loans, has been blocked since the 8th US Circuit Court of Appeals issued a temporary stay in October. Since then the administration has stopped the application process. Holders of student loan debt currently not required to make payments as part of the Covid relief measures that will remain in effect until the Supreme Court issues its ruling.

In any civil case, the plaintiff must show that they have standing to persuade the judge that not only have they been injured by the defendant’s actions but also that a favorable court decision will redress that injury.

Of the various challengers, Missouri may have the best argument for standing. The state is harmed by the Biden plan because MOHELA will lose the revenue it earns from paying off the loan if the loan is forgiven, its lawyers argue. Advocates say Missouri would also be directly harmed because MOHELA has an obligation to make some payments to the state treasury to help fund capital projects for state universities. A spokesman for Bailey, the attorney general, did not respond to a request for comment.

In the court papers, the state goes into great detail in describing how the Mohela is not a separate entity from the state. For example, lawyers argue that the agency was created by the Legislature and that the governor appoints its board members.

“Thus, Mohela is part of Missouri, and the state has standing to challenge actions that undermine Mohela’s finances,” the state argues in its brief.

Solicitor General Elizabeth Prologer, representing the Biden administration, said in court papers that Mohela is a separate legal entity from the state of Missouri and therefore cannot be considered part of any analysis of whether the state itself has standing.

“Missouri can no longer maintain that the state and the Mohela are one and the same simply because it believes that the Mohela stands to challenge a policy that the state opposes,” wrote Prologger. He said there is no evidence that Mohela will face a significant drop in revenue or that the agency will not be able to meet its payment obligations to the state treasury.

Another brief filed by supporters of the program says Mohela has not paid the state for a decade.

‘Financial services giant’

MOHELA has attracted scrutiny for its role in the case from Democratic lawmakers and groups supporting Biden’s plan. According to the Student Borrower Protection Center, a non-profit organization that advocates for student loan relief, the agency has gone far beyond its original mandate and is now a “financial services behemoth” that charges every $10 of outstanding student loan debt. handles one of the

Persis Yu, the center’s deputy executive director, said MOHELA would earn money during the loan discharge process if Biden’s plan is implemented.

“There are a lot of leaps and assumptions you have to make” to conclude that Mohela stands up, he said.

Mohela said in a letter last year that his officials were “not involved” in then-Attorney General Derek Schmidt’s decision to challenge Biden’s plan. Scott Giles, Mohela’s executive director, did not respond to a request for comment.

In the states’ decision, the appeals court embraced the standing argument for Mohela that there were reasons to conclude that it was an organ of the state. Even if it is not, the loss caused to the state due to the decline in Mohela’s payment to the exchequer for the capital projects is sufficient to establish standing, the court concluded. The appeals court did not decide whether the other states – Arkansas, Iowa, Kansas, Nebraska and South Carolina – had standing.

Michael Dorff, a professor at Cornell Law School, said that although he expects the justices to take the stand on Tuesday and argue, such questions rarely delay if the majority wants to decide legal merits, especially ones like student loans.” in an ideologically appalling case”.

leading question principle

If the judges conclude that Mohela has standing, they may decide the case based on a legal argument made by the challengers, which the Supreme Court recently called the “major question doctrine.” Under that doctrine, federal agencies cannot initiate broad new policies that have a significant economic impact without explicit authorization from Congress.

The Biden administration says its authority comes from a 2003 law called the Higher Education Relief for Students Opportunity Act, better known as the HEROES Act. The law states that the government can provide relief to student loan borrowers when there is a “national emergency”.

The key question principle fits neatly with the conservative majority’s skepticism about the broad assertion of federal power. The court cited Biden’s ruling last year to block Covid vaccination or testing requirements for large businesses and curbs on the Environmental Protection Agency’s authority to limit carbon emissions from power plants. Challengers say the language in the HEROES Act is not specific enough to authorize a proposal as broad as Biden’s plan.

It is because of the conservative bloc’s stance on such issues that most court observers believe the student loan program is likely to be invalidated if the judges conclude that Mohela, or any of the other challengers Anyone standing.

“This is clearly the most likely outcome,” Somin said.



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