As the Biden administration forges ahead with new student debt relief initiatives, a looming threat casts a shadow over these efforts: the continued contract with student debt servicer MOHELA. This particular servicer, entangled in the Supreme Court’s recent decision to ax President Joe Biden’s broad student debt relief proposal, is now at the center of activist concerns. The Debt Collective, a group of debt activists, is sounding the alarm, insisting that the administration’s ties to MOHELA could spell doom for future debt cancellation endeavors.
MOHELA, a servicer mired in allegations of loan servicing errors and account mishandling, isn’t just any contractor. It’s become a legal linchpin, with the Supreme Court granting it standing in the case against Biden’s comprehensive debt relief plan. This essentially means the court recognized MOHELA’s potential financial losses due to debt relief as a valid concern, a point that activists and even Supreme Court liberals have contested.
What’s at stake here isn’t merely a contractual relationship but the very viability of Biden’s student debt relief aspirations. According to the Debt Collective, by keeping MOHELA on board, the administration not only risks entanglement in “frivolous lawsuits” but also jeopardizes any chance of delivering on its promise of economic and racial justice through debt relief.
The situation is made more pressing by Biden’s latest relief plan, targeting over 30 million borrowers for cancellation of up to $20,000 in debt for those struggling under the weight of ballooning loan balances. However, activists caution that this plan, while a step in the right direction, is both insufficient to tackle the overarching crisis and vulnerable to potential legal challenges as long as MOHELA remains in the picture.
The call to action is clear: cut ties with MOHELA to safeguard future debt relief efforts. This isn’t just about avoiding legal pitfalls; it’s about ensuring that the administration’s plans for student debt relief can move forward unimpeded, fulfilling promises of relief and reform that countless Americans are desperately waiting for. As we inch closer to another election, the stakes couldn’t be higher, both for borrowers and for an administration aiming to make good on its commitments.
