The organization at the core of the Supreme Court battle over student-debt relief is projected to increase revenue from its activities collecting student loans in the months following the cancellation, documents obtained through an open-records law suggest.
The analysis was based on MOHELA documents the two organizations that published the report obtained by making public-record requests through Missouri’s Sunshine Law. MOHELA didn’t provide comment on the report’s claims. The organization has said it wasn’t involved in the states’ decision to sue over the debt-relief plan.
“This whole case relies on one core claim in order for the states to have standing, and therefore for the case to be heard, which is that MOHELA will lose revenue after student-debt cancellation and that therefore there’s this chain by which Missouri is supposed to be harmed,” said Louise Seamster, an assistant professor of sociology and African American studies at the University of Iowa and one of co-authors of the analysis.
To make their argument before the Supreme Court, the states used MOHELA’s financial documents, which they received through state open records law requests. The states’ attorneys don’t provide much detail on their calculation, but in oral arguments the lawyer representing the states referenced the “ongoing fee” MOHELA would earn from servicing accounts if the court strikes down the cancellation plan, indicating that they’re focused on impact the plan could have on MOHELA’s future revenue.
Instead of looking at the cancellation plan’s impact on projected revenue, the authors of the analysis compared MOHELA’s estimated revenue from the student loan program in the year following cancellation to the organization’s revenue from the program in 2022. “This story is really simple, it’s like one number is bigger than another number and the lawsuit requires it to be the other way around,” said Thomas Gokey, the co-founder of the Debt Collective and one of the authors of the report.
Still, MOHELA projected a smaller revenue increase than the authors because the firm relied on different assumptions, the authors said. In addition, MOHELA’s internal document indicates that the organization will earn less from servicing direct student loans going forward than they would have otherwise if cancellation goes through.
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