Legal challenges are already threatening -2-

Still, it’s become more common — and controversial — in recent years for judges in lower federal courts to issue a nationwide injunction in cases like these, Rubenstein said. “A single judge can have so much power over something as important as affecting millions of people across the country,” he said.

In the past, this type of action was extraordinary, and lower court judges would typically have limited the injunction to the parties to the case, such as the six states that filed this lawsuit, Rubenstein said. Now “it has become much more common in high-profile cases” for lower courts to issue nationwide injunctions and initiate “an appellate review not of the merits” but of the geographical scope of the injunction at the place.

If that happens or if the case continues to play out through the court system through other means, borrowers seeking relief could be left in limbo, said David Bergeron, a former Ministry of Environment official. Education that supported debt cancellation but preferred it be done through Congress. .

“I hope this will be resolved quickly, I hope this will be resolved for the benefit of the borrowers and I hope that at that time the people who filed the complaint will not decide to move forward and to appeal and drag it out even longer,” he said. “My fear from the start is that borrowers could get stuck in a holding pattern for an extended period of time if there is litigation and the litigation results in appeals.”

The threat of litigation and changes to requirements to deal with that threat also increase the risk of “operational failures,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, which represents student loan servicers.

“It creates uncertainty,” he said. “We may be anticipating a result that will not happen.” Still, he said the services will continue to prepare to offer debt relief. “The duty officers work for the federal government,” he added, “that’s our client and that’s our boss and we do what they tell us to do until a judge come in and tell us not to.”

The repairers say they will take these actions even if the interests of one of their own are implicated in the suit by state attorneys general. Although MOHELA is not a plaintiff in the case, the alleged harm the debt relief would cause the organization is at the heart of the lawsuit.

In a statement, Abdullah Hasan, spokesman for the White House, highlighted the role played by student loan organizations in this matter. “Republican officials in these states are siding with special interests and fighting to stop aid to borrowers buried under mountains of debt,” he said. “The president and his administration are legally giving working and middle-class families a break as they recover from the pandemic and prepare to resume loan repayments in January.”

Shortly after the Biden administration announced the debt relief plan, Buchanan said repairers were unlikely to take legal action to block it. “We’ve been focused on working with the Department to try to find a way to provide that loan forgiveness directly to borrowers,” he said. Nevertheless, “it is factual that the managers and holders of these loans suffer financial harm,” he added. “If the AG makes that claim, they’re not wrong.”

While the lawsuit largely centers on the threat debt relief poses to student loan agencies, the rhetoric surrounding it has also been political.

To residents of Arkansas who expect to receive debt relief, Leslie Rutledge, the Republican Attorney General, had a message: “You took out this loan with the promise that you would repay it,” she said. said at a press conference on Thursday. “Do what I did and pay that loan back. Don’t blame your loan on someone else who didn’t get a college degree like you did.”

Tom Miller, a Democrat and Iowa attorney general, did not sign the suit, although the state’s Republican governor joined on his behalf. During his decades-long career as a top law enforcement official in Iowa, Miller focused on student loan issues, including law enforcement at purpose-built colleges. lucrative.

“The governor has the statutory right to join these lawsuits, and our office has a responsibility to help him do so,” Miller said in a statement. “If she hadn’t made this request, our office would not have joined this lawsuit in any way. Politically, I believe the student loan forgiveness will bring much-needed relief to thousands of Iowans. who felt the huge crush of student debt.”

-Jillian Berman


(END) Dow Jones Newswire

10-01-22 1327ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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