Student Borrower Protection Center: ‘Sham lawsuit’ aims to keep borrowers trapped in debt
This lawsuit was filed on behalf of state entities that own federally backed student loans, including the Missouri Higher Education Loan Authority, or MOHELA. The states included in the lawsuit are South Carolina, Arkansas, Missouri, Iowa, Nebraska and Kansas.
“Missouri Attorney General Eric Schmitt, acting on behalf of student loan giant MOHELA, joined with four other Republican state AGs to bring a sham lawsuit to keep tens of millions of student loan borrowers trapped in debt,” said Mike Pierce, the executive director of the nonprofit Student Borrower Protection Center and a former federal regulator for the student loan industry, in a statement to media. “This suit is just the latest chapter in a long history of student loan companies like MOHELA and their Republican allies cheating people with student debt out of their rights. “
Pierce said the student loan industry is making it clear to the American people that they will stop at nothing to protect their profits.
“ For decades, borrowers, advocates and law enforcement officials have raised the alarm on the student loan industry’s illegal and deceptive practices—including in a scathing report from a federal regulator unveiled just today exposing new evidence of mismanagement and abuse across the student loan system,” Pierce said.
Pierce said that governments have given billions of dollars to companies like MOHELA, and “this must end now.”
“As President Biden cancels student debt for tens of millions, state governments need to pull the plug on their failed experiments with student lending and unwind student loan companies like MOHELA,” he said.
The lawsuit appears to have been filed in Missouri, where MOHELA is headquartered, in part because of a lucrative federal contract won by MOHELA to manage millions of student loan borrowers’ accounts on behalf of the U.S. Department of Education, according to the release.
In their lawsuit, these Republican attorneys general allege that the State of Missouri has suffered irreparable harm because of the expected “compliance costs” incurred by MOHELA, a federal contractor, as a result of this action.
The Student Borrower Protection Center is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. economic opportunity for the next generation of students.
Learn more at protectborrowers.org