The loan company that was cited in a lawsuit that temporarily blocked President Biden’s debt forgiveness plan said it had no hand in the legal challenge that is being brought in part on its behalf.
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The company said it is “a public instrumentality of the state. As a governmental entity it does not have shareholders and does not exist to make profits. Any available funds above reasonable operating needs and reserves are devoted by MOHELA to student financial aid.”, the states argued that Missouri had a right to sue on MOHELA’s behalf because it “performs ‘an essentialfunction’” and “its board is comprised of public officials and people appointed by the governor.”that premise.
MOHELA is the primary servicer for borrowers pursuing Public Service Loan Forgiveness, a federal program for teachers, firefighters and other public servants. The company services roughly $59 billion in federal direct loans as well as loans from the defunct FFEL program, according to court filings. In the wake of the states’ lawsuit, the American Federation of Teachers and the nonprofit Student Borrowers Protection Center last month sent MOHELA a. The group’s accused the company of violating California’s Student Borrower Bill of Rights, which prohibits student loan servicers from interfering with borrowers’ rights to loan forgiveness. The Student Borrowers Protection Center said it was prepared to take legal action if the company failed to stand down on the lawsuit.
On Wednesday, SBPC executive director Mike Pierce said: “It appears that these states just got caught misleading a federal appellate court in a ham-fisted effort to score political points against the president. This is the clearest sign yet that the right-wing state challenge to student debt relief has no legal basis and will prove fruitless in the end.”
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