Now, let’s look at the situation with President Joe Biden’s broad debt cancellation plan.
This plan would have provided up to $20,000 of debt cancellation for Pell Grant recipients who meet certain income criteria and up to $10,000 for others who meet the eligibility requirements.
Unfortunately, this relief application is on hold while the Supreme Court evaluates the plan’s legality. Weeks after being announced, the proposal faced legal obstacles and resistance from Republican lawmakers and attorneys general in states like Missouri, Arkansas, Kansas, Nebraska, and South Carolina.
These opponents claim that the student debt relief plan breaches the Constitution and federal law, in part because it bypasses Congress, which they argue holds the authority to enact laws related to student loan forgiveness.
The Biden administration pushed back, saying its authority comes from a 2003 law called the Higher Education Relief Opportunities for Students Act, known as the HEROES Act. The law, which is the same one President Trump used to freeze interest rates and pause student loan payments at the start of the pandemic, states that the government can provide relief to recipients of student loans when there is a “national emergency.
Though initially dismissed by a lower court judge in St. Louis, the legal challenge against the White House initiative was successful on appeal, temporarily halting the program. This means the debt cancellation plan is currently paused, pending further action from the U.S. Supreme Court.
Why is Missouri against student loan forgiveness?
Missouri’s opposition to student loan forgiveness primarily stems from concerns over the state’s legal standing and the potential financial impact on the Missouri Higher Education Loan Authority (MOHELA).
The state, supported by Republican officials, believes it has the legal standing to challenge President Biden’s student loan forgiveness plan because of MOHELA’s role in servicing student loan debt.
They argue that if loans were forgiven, MOHELA could suffer significant financial losses.
Additionally, Missouri’s opposition to the plan may be influenced by political factors, with the state’s Republican officials disagreeing with the Biden administration’s approach to addressing student loan debt.
MOHELA’s Involvement in Missouri’s Legal Argument
The Missouri Higher Education Loan Authority (MOHELA), a student loan servicer in the St Louis area, plays a pivotal role in the ongoing legal dispute surrounding Biden’s debt forgiveness initiative. MOHELA manages financial aid for millions of borrowers.
The state of Missouri asserts its legal standing to contest the Biden plan, citing MOHELA’s involvement in servicing student loan debt and the potential financial losses it could incur if loans were canceled.
Grasping the Significance of Legal Standing
Legal standing is a key element in the U.S. Supreme Court and appeals court decisions regarding Biden’s student loan forgiveness proposal.
If the courts determine that Missouri or any other challengers have standing, the conservative majority will probably deem the program unlawful.
Such a decision would impact millions of Americans, including college students, who stand to gain from student loan relief.