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Bombshell Report Exposes Key Argument Against Student Debt Relief as ‘Categorically False’

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.Wi…



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."

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."


This content originally appeared on Common Dreams and was authored by Jake Johnson.


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