How Biden’s student loan repayment plan affects MOHELA

Oct 15, 2024

Joe Biden speaks.

A popular Biden administration student loan repayment program, known as SAVE, is being by blocked by the courts. | Pool photo by Saul Loeb

SAVE UPDATE: A Missouri judge will hear oral arguments next Thursday about the legality of a Biden administration student debt repayment program, known as SAVE.

A refresher: District Judge John A. Ross of the Eastern District of Missouri blocked the Education Department from carrying out “any further loan forgiveness for borrowers” under the SAVE program until he decides the full case. Other provisions of the plan were blocked in a Kansas court. (The entire SAVE plan ended up being blocked by an appeals court, but that’s another story.)

Ross agreed that the program’s loan forgiveness provisions would likely harm Missouri because it would reduce the fees that the Education Department pays to the Missouri Higher Education Assistance Agency, or MOHELA. This was the same point that was at the center of the Supreme Court case over Biden’s first mass student debt relief program.

Some student debt relief advocates and legal experts are skeptical of this argument.

“At best, MOHELA’s financial injury is speculative, and at best it’s minimal,” said Alpha Taylor, a staff attorney at the National Consumer Law Center, a nonprofit that advocates for low-income people and other vulnerable groups.

MOHELA did not immediately respond to a request for comment.

Missouri’s student loan servicer is paid an administrative fee for each customer account. The accounts that are the easiest and cost the least for MOHELA to manage are the ones where borrowers are current on their payments, Taylor said. When a borrower falls into default, MOHELA loses money on that.

SAVE could actually make things easier for the servicer, he said . Since many borrowers on SAVE have $0 monthly payments, they are significantly less likely to go into default — which Taylor believes could ultimately be good for MOHELA’s bottomline.

Louise Seamster, a sociologist who researches economic inequality, also isn’t sold on the argument that Biden’s plan would hurt MOHELA. She’s previously written about how the servicer wouldn’t be hurt by debt cancellation.

Seamster points out that in April, MOHELA requested some of its accounts be transferred to other servicers.

“This whole case is hinging on [the idea] that MOHELA might lose accounts, but MOHELA has requested fewer accounts from the Department of Education,” Seamster said. “It also underlines why it has never been a party for any of these lawsuits.”

IT’S TUESDAY, OCT. 15. WELCOME TO WEEKLY EDUCATION. I’m your host, Rebecca Carballo. Let’s talk: rcarballo@politico.com. The team: Bianca Quilantan at bquilantan@politico.com, Juan Perez Jr. at jperez@politico.com and Mackenzie Wilkes at mwilkes@politico.com.

Want to receive this newsletter every weekday? Subscribe to POLITICO Pro . You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories.

IN THE STATES

TURBULENT TENURE: Chicago Mayor Brandon Johnson came into office as an outsider vowing to shake things up.

But nearly two years into his term, he’s increasingly isolated and has alienated even some of his ideological allies as he battles to implement his progressive agenda, Shia Kapos reports.

The most glaring recent example is his strong-arm effort to overhaul the city’s school board. Its seven members rejected Johnson’s call to fire the schools’ CEO — who had rebuffed his request to take out a short-term, high-interest loan to fix a budget shortfall — and they resigned en masse.

Johnson, a former social studies teacher and an organizer for the Chicago Teachers Union, was a surprise hit to win the Chicago mayor’s race.

He came up the ranks as an activist, even leading a hunger strike to keep a South Side school open. The teachers union backed his bid to become a county commissioner and then, a few years later, anointed him as its candidate for mayor.

Johnson aggressively defended his tenure in an interview with POLITICO.

“There are people who might have some trepidation around how bold our vision is,” Johnson said, pointing to big investments in affordable housing, among a list of accomplishments. “There are individuals that are having a tough time adjusting. But for the masses in the city of Chicago, they’re very much aligned with the vision.”

Many City Council members support Johnson’s progressive agenda for the city, but they bristle at how he’s been trying to accomplish it. His unilateral moves to remake the school board, in particular, have antagonized city officials like Alderman Bill Conway.

“I appreciate that Mayor Johnson is a principled man, but he also needs to realize that city government is not set up like a dictatorship,” Conway said.

Gun Violence

ON THE RISE: The number of gun-related incidents on school grounds, as of the end of September, has officially outpaced the total number of incidents that occurred in 2023, according to a report from the nonprofit Everytown for Gun Safety.

This year, there have been at least 163 occurrences of gunfire — an uptick from 158 last year — on school grounds, resulting in 46 deaths and 108 injuries nationally.

“The time for thoughts and prayers expired decades ago,” said Camille Paradis , a survivor of the shooting at Sandy Hook School and volunteer with Student Demand Action. “Students aren’t asking, we’re demanding that lawmakers get their priorities straight because it’s not the books that are killing us – it’s the easy access to guns.”

Ever since a mass shooting at Apalachee High School in Winder, Georgia, last month — during which two students and two teachers were killed — school districts and law enforcement have reportedly seen an increase in violent threats, according to Everytown’s research.

The following states have the highest reported cases of gun violence on school grounds in 2024 so far: