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MOHELA Denies Involvement in Student Debt Relief Lawsuit

— November 2, 2022

MOHELA stressed in a letter to Democratic Rep. Cori Bush that it had no involvement whatsoever in the decision to file the lawsuit seeking to overturn Biden’s debt relief program.

Student loan servicer MOHELA has distanced itself from a Republican-led lawsuit seeking to challenge President Joe Biden’s debt forgiveness plan.

According to The Washington Post, the lawsuit was filed by the attorneys general of Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina.

In their complaint, the attorneys general claim that Biden overstepped his authority by creating a student loan forgiveness plan that could jeopardize the revenue of state-level entities that profit from the disbursement and administration of student loans.

The lawsuit cites as an example the Missouri Higher Education Loan Authority, or MOHELA.

While MOHELA is not a named plaintiff in the proceedings, some Democratic lawmakers—including Rep. Cori Bush (D-NO)—have criticized the agency for its perceived involvement in the lawsuit.

However, on Tuesday, Department of Justice attorneys informed the U.S. Circuit Court of Appeals for the 8th Circuit of a letter that MOHELA had sent to Rep. Bush, in which the agency maintained that it played no role in Missouri Attorney General Eric Schmitt’s decision to file the lawsuit.

A gavel. Image via Wikimedia Commons via Flickr/user: Brian Turner. (CCA-BY-2.0).

“MOHELA’s executives were not involved with the decision of the Missouri Attorney General’s Office to file for the preliminary injunction in federal court on September 29, 2022,” MOHELA said.

“The only communications between MOHELA and [the Missouri attorney general’s office] as it relates to student debt relief, is that the Office recently filed a series of sunshine law requests on MOHELA seeking copies of documents relative to MOHELA’s federal loan servicing contract,” MOHELA wrote in its letter to Rep. Bush.

Bush, notes The Washington Post, had earlier asked MOHELA whether it was actively supporting Republican efforts to undermine Biden’s loan forgiveness program.

In response, MOHELA simply said that it is “faithfully fulfilling its obligations pursuant to its federal loan servicing contract.”

MOHELA further said that it is a “public instrumentality of the state.”

“As a government entity, [MOHELA] does not have shareholders and does not exist to make profits,” the company wrote. “Any available funds above reasonable operating needs and reserves are devoted by MOHELA to student financial aid.”

The Washington Post notes that, while the Department of Justice has used MOHELA’s letter to undermine the states’ case, the attorneys general have touted the correspondence as evidence that any loan forgiveness-related reduction to the company’s profits could harm the public interest.

“Harming MOHELA’s finances reduces money that MOHELA uses to originate loans for Missouri students, fund financial aid programs of the Missouri Department of Higher Education and Workforce Development, and contribute to Missouri’s Lewis and Clark Discovery Fund,” the Republican attorneys general said.


A major student-loan company just undermined the GOP-led lawsuit that temporarily halted Biden’s debt cancellation

Loan company distances itself from GOP-led states’ student debt suit

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