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

WASHINGTON — Ellen Weber could shave off some of the more than $100,000 she owes in student loans if President Joe Biden’s debt relief plan were to ever go into effect, but Republican officials in her home state of Missouri has worked hard to make sure that doesn’t happen. it happens

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 at the US Supreme Court on Tuesday.

His loan is serviced by the Missouri Higher Education Loan Authority, known as MOHELA, which could play an important role in the litigation.

The justices will consider two separate legal challenges to Biden’s plan, one of which involves Missouri. And part of the case will depend on whether the state of Missouri, led by Republican officials, has standing to challenge Biden’s proposal, given MOHELA’s role in servicing student loan debt and what it claims it would lose. if the loans are forgiven.

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

“To feel that the state is fighting against my interests and the interests of other people who are going to benefit from this is incredibly frustrating,” he said in an interview. Weber took out the loan so she could finish a master’s degree in social work. The payments she made haven’t made a dent in the principal she owes, meaning her total debt is more now than it was a decade ago.

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

Ellen Weber with her daughter Lillian Weber-Santaularia. (Edited by Ellen Weber)

Most experts believe that if the Supreme Court finds that at least one of the challengers has standing (meaning that the challenger can show that it will suffer harm from the proposed law), then the 6-3 conservative majority of the court concludes that the program is illegal. .

“Standing is crucial,” said Ilya Somin, a professor at George Mason University’s Antonin Scalia School of Law. Referring to the legal arguments of the Biden administration in defense of the proposal, he said that it seems that the government “has put most of its eggs in the permanent basket”, as it understands that it will persuade the court that program is legal for any other reasons. would be a harder hurdle to overcome.

The court is hearing two cases, one brought by six states, including Missouri, and the other 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 to take effect last fall — violates the Constitution and federal law, in part because it bypasses Congress, which they said has the power to create laws related to student loan forgiveness.

The program, which allowed eligible borrowers to write off up to $20,000 in debt, has since been blocked. the 8th US Circuit Court of Appeals issued a temporary stay in October. The administration has since closed the application process. Holders of student loan debt currently do not have to make payments as part of the Covid relief measures which will remain in place until the Supreme Court issues its decision.

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

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

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

“Thus, MOHELA is part of Missouri, and the state has standing to challenge actions that impair MOHELA’s finances,” the states argue in his briefs.

Solicitor General Elizabeth Prelogar, who represents the Biden administration, said in court documents 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 statehood.

“Missouri cannot now maintain that the State and MOHELA are one and the same simply because it believes that MOHELA has standing to challenge a policy that the State opposes,” Prelogar wrote. She added that 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 short one presented by the supporters of the program says that MOHELA has not made a payment to the state for a decade.

“Jesus of Financial Services”

MOHELA has drawn scrutiny for its role in the case from Democratic lawmakers and groups that support Biden’s plan. The agency has moved far beyond its original mandate and is now a “financial services powerhouse” that manages one in every 10 dollars of outstanding student loan debt, according to the Student Borrower Protection Center, a nonprofit organization that favors student loan relief.

Persis Yu, the center’s deputy executive director, said MOHELA would make money during the loan release process if Biden’s plan went into effect.

“There are a lot of jumps and assumptions you have to make” to conclude that MOHELA has standing, he said.

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

In ruling for the states, the appeals court embraced the standing argument for MOHELA, saying there are reasons to conclude it is an arm of the state. Even if it is not, the damage to the state caused by a decrease in MOHELA payments in the treasury for capital projects is enough to establish the position, the court concluded. The appeals court did not decide whether the other states – Arkansas, Iowa, Kansas, Nebraska and South Carolina – had states.

Michael Dorf, a professor at Cornell Law School, said that while he expects the justices to debate on their feet Tuesday, such questions rarely delay them if a majority wants to decide the legal merits, especially in a “tight ideological case ” such as student loans.

Major questions doctrine

If the justices conclude that MOHELA has been, then they could decide the case based on a legal argument made by the challengers that the Supreme Court has recently embraced called the “major questions doctrine.” Under this theory, federal agencies cannot initiate new policies that have a significant economic impact without express authorization from Congress.

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

The major questions doctrine fits perfectly with the conservative majority’s skepticism about broad assertions of federal power. The court cited it last year blocked Biden’s Covid vaccination or testing requirement for larger businesses and curbing the Environmental Protection Agency’s authority to limit carbon emissions from power plants. Challengers say the language in the HEROES Act isn’t specific enough to authorize a broad proposal like Biden’s plan.

It is because of the position of the conservative bloc on such issues that most court observers believe that the student loan program is likely to be invalidated if the judges conclude that MOHELA, or any of the others defiant, they are standing.

“It’s clearly the most likely outcome,” Somin said.

This article was originally published in NBCNews.com

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