The American Federation of Teachers and the Student Borrower Protection Center have demanded that student loan giant Missouri Higher Education Loan Authority, or MOHELA, “cease and desist from engaging in a range of unlawful loan servicing practices and end the company’s scheme to deny student debt relief to tens of millions of Americans,” according to a news release from the SBPC.
MOHELA is part of a lawsuit to block President Biden’s effort to cancel up to $20,000 in student debt for as many as 40 million people nationwide.
President Biden’s cancellation plan will lift as many as 20 million borrowers out of debt completely – with the greatest benefits going to lower-income borrowers and borrowers who were in default on their loans.
SBPC and AFT allege that this lawsuit, prosecuted on behalf of MOHELA, is part of an unlawful scheme by the company to deny more than $58 billion in student debt relief to California families in violation of California’s Student Borrower Bill of Rights.
“MOHELA’s scheme isn’t just a betrayal of the trust it owes millions of student loan borrowers, it is part of a larger pattern of illegal behavior and must end now,” said Randi Weingarten, president of the American Federation of Teachers. “People with student debt in California and across the country have a right to life-changing debt relief and we will not let a rogue student loan company stand in the way.”
In 2020, California lawmakers enacted a Student Borrower Bill of Rights, barring any student loan servicer from “substantially interfering” with Californians’ rights to loan forgiveness.
Companies that violate this prohibition are given a 45-day window to “cure” these illegal practices or face a private lawsuit on behalf of all affected California borrowers.
Should MOHELA fail to withdraw its lawsuit, the company may be liable for treble damages – private liability that could total more than $175 billion, according to the release.
Earlier this year, MOHELA became the sole federal contractor responsible for assisting public service workers pursuing debt relief under the Public Service Loan Forgiveness program.
A copy of the cease and desist letter sent electronically to MOHELA by AFT and SBPC is available at www.protectborrowers.org/mohela
“Today’s action by SBPC and AFT shows that MOHELA cannot play politics with the financial lives of tens of millions of families in California and across the country,” said SBPC executive director Mike Pierce.
On Wednesday, a federal judge in Missouri will consider whether to grant MOHELA’s request to temporarily block student debt relief for all 40 million eligible student loan borrowers.
Last week, on Oct. 7, the U.S. Department of Justice filed a brief in response to this lawsuit offering new evidence that MOHELA’s lawsuit is rife with false statements and fundamentally misstates the law and policy it seeks to challenge, according to the release.
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Crystal Graham
