![]() ![]() The result of the legal fight between the federal government and Republican-led states has been 43 million student borrowers eagerly awaiting a decision from the nation’s highest court that will determine the financial burden they bear from the cost of their higher education. ![]() The case moved up through smaller courts directly to the supreme court, which will now deliver the final decision. The Biden administration argued it did under the Heroes Act, which gives the secretary of education authority to make changes to any provision of laws relating to student aid programs in the aftermath of the September 11 attacks. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. For more information see our Privacy Policy. Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. Six Republican-led states – Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina – then took legal action against the Biden administration to block the legislation, claiming the president did not have such broad authority to make a decision. Many Republicans argued the plan would cause states, like Missouri, to lose revenue. But even before the announcement, the move was met with a swift backlash from conservative lawmakers. Why is it on our shoulders to be doing this task? This is a basic investigation of ‘how many accounts Mohela services and what will be the impact of cancellation on those accounts?’”ĭelivering on his campaign promises, Biden announced the federal government’s plan to forgive up to $20,000 of student loans for qualifying borrowers in 2022. “We’re not financial auditors or political experts. She called the journey to getting the documents unsealed “frustrating”. The reasons for the vastly different figures is due to using more recent data from Mohela from January 2023 and taking into account the millions of new loans the student loan servicer absorbed since 2022.Īccording to the group’s calculations, Mohela would thus not be financially injured from Biden’s plan as it has claimed.Įleni Schirmer is a postdoctoral researcher at Concordia University’s Social Justice Centre, and an author of the study on Mohela. ![]() ![]() The Debt Collective and the Roosevelt Institute argue that Mohela’s revenue after student debt cancellation would actually be over $167m – an 88% increase. One internal company document, called the “Forgiveness Impact Summary”, outlines what would happen if the loan forgiveness plan were enacted.įigures from August 2022 show that if $20,000 of student loans for Pell grant recipients and $10,000 of student loans for every other borrower were forgiven, Mohela would still earn over $96m in revenue from servicing direct loans, compared with $88.9m in revenue in 2022 – a 9% increase. “After President Biden’s proposal is enacted, Mohela’s direct loan revenue will actually be larger than any prior point in the company’s existence,” the activist groups wrote in a statement. In fact, the opposite would be true, the groups said. Internal emails containing company calculations reveal that even after the debt cancellation is enacted, Mohela would not lose revenue. The Debt Collective, an organization that fights financial exploitation and unjust debts, along with the liberal thinktank the Roosevelt Institute, submitted a Freedom of Information Act request to make public documents that refute Mohela’s claim it will suffer financial consequences as a result of the plan. ![]()
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