The Cato Institute and the Mackinac Center for Public Policy, represented by the New Civil Liberties Alliance, filed a federal lawsuit in Michigan last week against the feds over the “One-Time Account Adjustment” plan, which would give more than 800,000 student loan borrowers forgiveness totaling about $39 billion.
The lawsuit claims the move to reduce required work from 10 years to seven years for certain borrowers will disadvantage organizations like Cato and Mackinac Center for Public Policy. “Newsflash for Secretary Cardona and Administrator Cordray: Nonpayments are not payments. No amount of nonsense changes the essential fact Congress required debtors to make payments before receiving debt relief,” said Mark Chenoweth, president and general counsel of the New Civil Liberties Alliance.
According to the Associated Press, the “fix” was to address “forbearance steering” where loan services suggested borrowers should go into forbearance, pausing payments for a certain period of time.