Part 3

Like parasites complaining because they are about to be de-wormed!!

The little-known student loan middlemen who are threatening debt forgiveness - MarketWatch https://www.marketwatch.com/story/the-little-known-student-loan-middlemen-who-are-threatening-debt-forgiveness-11668786732?reflink=mw_share_twitter
#GreedIsAnti-Social
#StudentLoanForgiveness

"Borrowers face long wait times
Now, that servicing income is part of what’s at issue in the six state lawsuit challenging the broad-based student debt forgiveness. The states have argued that canceling debt would hurt MOHELA’s bottom line — and therefore Missouri’s — because it would eliminate many of the accounts serviced by MOHELA.

At the same time, state attorneys general are invoking the potential for MOHELA, which works with borrowers across the country, to lose student-loan accounts in litigation challenging the debt-relief program, borrowers and advocates are criticizing the way the organization has handled a recent major increase in account volume.
...
Meanwhile, while borrowers like Morton were struggling to reach MOHELA, the organization’s interests are being invoked in the lawsuit brought by the six states. And though the 8th circuit’s ruling was in part based on the idea that potential harm to MOHELA is enough for Missouri to have standing to sue, the organization told Bush, the Missouri Congresswoman, in the letter that its executives “were not involved with the decision of the Missouri Attorney General’s Office,” to file the lawsuit aimed at blocking the debt relief plan.

The only communication the organization has had with the Missouri Attorney General’s office related to the student debt relief plan is through open records requests filed by the attorney general’s office for MOHELA documents related to its loan servicing contract, the organization wrote.

SBPC and the American Federation of Teachers wrote to MOHELA in October asking the organization to withdraw from the suit. In the letter they warned that participating in the suit puts the MOHELA at risk of violating a California law regulating student loan servicers in that state.That’s because the law bans these organizations from “substantially interfering” with state residents’ right to loan forgiveness.

SBPC and AFT are willing to sue MOHELA over that alleged violation in order to enforce the California law. The letter they sent served as a notice they were required to give MOHELA at least 45 days before taking any action. The organization hasn’t responded, according to SBPC, and if they don’t before the deadline, SBPC and AFT have the right to sue.

With the government no longer making loans under the bank-based program, the portfolio of old loans originally owned or guaranteed by these state-related entities continues to shrink and “there’s still no plan to deal” with these organizations, Bergeron said. “Then they can make mischief or people can make mischief on their behalf.”

He points to another example besides the student-debt relief lawsuit. In Rhode Island, where Bergeron lives, one of these state-affiliated organizations advertised its refinance product after the Biden administration announced its debt-relief plan. That’s even though any borrowers who refinanced their federal student loans into private debt would be ineligible for the debt relief.
...
Pastorious called the appearance of the ad Bergeron saw “frustrating, since we always try to do the best thing for borrowers.”

“Borrowers have had to provide, in writing, a statement that they understand they are giving up federal loan benefits, including potential loan forgiveness, if they wish to include a federal loan in a RISLA refinance loan,” he said in the email. “There are also several disclosures and links throughout our application process and website to help educate and inform borrowers about federal loan benefits and loan forgiveness.”

Still, Bergeron finds the ad troubling.

“They’re basically encouraging them to give up on the $10,000 or $20,000 in cancellation they might be entitled to,” he said. “I find it inexcusable for any government entity.”""

Part 2

Like parasites complaining because they are about to be de-wormed!!

The little-known student loan middlemen who are threatening debt forgiveness - MarketWatch https://www.marketwatch.com/story/the-little-known-student-loan-middlemen-who-are-threatening-debt-forgiveness-11668786732?reflink=mw_share_twitter
#GreedIsAnti-Social
#StudentLoanForgiveness

"MOHELA in 2006 claimed that $226 million of loans were eligible for the 9.5% subsidy instead of $43 million that actually qualified, according to an analysis of government records by Oberg, who worked on student aid policy at the state and federal level for decades. MOHELA vowed to stop, but the organization, like other state-affiliated entities accused of the same practice, didn’t return the ill-gotten funds because the Department of Education didn’t require it.

Though founded as entities with a mission of increasing access to higher education for their state’s students, the 9.5% subsidy scandal was just one example of the ways in which critics say these state-affiliated organizations and their leadership have sought to maximize the money they make off the federal student-loan program in a manner similar to private sector firms.

Blurring the lines
In the late 1990s, some of these organizations even began to convert to for-profit companies — and consumer advocates watched with alarm as the line between for-profit and tax exempt state agencies began to blur. By law, if they wanted to convert, these organizations had to preserve the nonprofit’s assets for the public good. In 1998, Nebraska’s state-affiliated secondary market, NebHelp, converted to a for-profit company called Nelnet, which still services student loans today, and launched a nonprofit called the Foundation for Education Funding to comply with the legal requirements, according to a 2000 report from Consumers Union, the publisher of Consumer Reports.

That organization created a scholarship program for low-income students, but in order to be eligible to receive the funds, the students had to use the type of federal student loan offered by Nelnet, the report noted. This requirement effectively shut out students interested in attending the University of Nebraska-Lincoln, the largest college in the state, which used another type of federal student loan.

The Foundation for Educational Funding also used about $800,000 to launch centers in the state that provided students with information about colleges, scholarships and financial aid. Only the for-profit company affiliated with the nonprofit was allowed to advertise in those centers, according to Consumers Union.

The goal of the benefits the federal government provided these state-related entities over the first several decades of the student loan program — like assuming almost all of the risk for guaranty agencies and offering secondary market operators special subsidies — was to encourage them to participate in the program and ensure that enough capital was available for students to continue to borrow to attend college.

But during the financial crisis, investors became skittish about providing capital to private lenders in the student-loan system, despite the federal guarantee. To ensure students would be able to access loans to pay for college, the government essentially bailed these and other entities that owned federal student loans out — the feds bought up some of some of the loans held by private lenders so they’d have the capital to make new ones.

“At that moment when students needed the money the most — their parents couldn’t get home equity loans — the system froze,” Bergeron said. “That, for me, was the biggest failure,” of the bank-based student loan system, he added.

When, about a year later, the Obama administration sought to end the bank-based student-loan system and have new federal student loans be made exclusively by the government directly to students, state-affiliated as well as nonprofit guaranty agencies and secondary market operators fought the transition, lobbying their members of Congress to keep the bank-based loan system in place.

When that didn’t work, “they demanded a piece of the contracts that came afterwards,” Shireman said. During that period, when he served as Deputy Undersecretary of Education, Shireman visited MOHELA’s headquarters near St. Louis, where leadership and state lawmakers were concerned about how the transition to direct lending would impact jobs in the state.

Though there would be no new bank-based loans for these organizations to originate or guarantee they received a vow from Congress that at least some would be able to participate in the direct lending program as servicers, or the organizations that manage student loan payments on behalf of the federal government.

Like parasites complaining because they are about to be de-wormed!!

The little-known student loan middlemen who are threatening debt forgiveness - MarketWatch https://www.marketwatch.com/story/the-little-known-student-loan-middlemen-who-are-threatening-debt-forgiveness-11668786732?reflink=mw_share_twitter
#GreedIsAnti-Social
#StudentLoanForgiveness

"For decades, lawmakers shaped policy to benefit for-profit companies, nonprofits and state-affiliated organizations that earned money from the federal student-loan system, sometimes to the detriment of borrowers. Now, threats to these organizations’ bottom line could derail the Biden administration’s debt-cancellation plans.

In their lawsuit asking the court to strike down the debt forgiveness plan, six Republican-led states are arguing that they’ll be harmed by the cancellation program — and therefore have the right to sue over it — in part because it will cut into the revenue of state-affiliated entities that earn money from owning old student loans and servicing new ones.

Attorneys representing the states cite potential harm to more than one of these entities as well as other claims as reasons why they have standing or the right to bring a lawsuit over the debt-cancellation plan. More than anything, it’s the risk to the financial interests of the Higher Education Loan Authority of the State of Missouri, or MOHELA, that appears to have convinced a panel of appellate court judges in the 8th circuit to grant the states’ request to temporarily block the Biden administration’s program while they hear the case.
...
Officials at MOHELA, which services student loans on behalf of the federal government, have said they weren’t involved in the states’ decision to file the lawsuit. Still, the litigation is the latest example of how the interests of these state-affiliated organizations and nonprofits that earn millions of dollars through their participation in the student loan system can impact policy surrounding it — and the fate of millions of borrowers.

“We are in this unusual position where the president’s political opponents have sought to block this enormous piece of higher education policy using this big student loan company as a cudgel,” said Mike Pierce, the executive director of the Student Borrower Protection Center, an advocacy group. “Missouri decades ago created this private sector company to buy up and make loans that were guaranteed by the federal government and that’s a program that hasn’t existed since 2010. But this company has been allowed to exist and compete for federal contracts…and grow and grow and grow until it presents this existential threat to the entire student loan system.”

Part of the student loan system for decades
An integral part of the federal student-loan system for decades, these entities have maintained their involvement in and influence on the program, even as their role has become less crucial, or according to some critics, obsolete.
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“It was as if you thought you had a roommate who was helping to pay the rent and over time you end up paying the roommate to live there,” said Shireman, who worked on student loan policy both in Congress and at the Department of Education for decades. "