Six Republican state AGs sued to block Biden from canceling student debt.
They claim "standing" because their states-- SC, KS, IA, NE, AR, MO -- own old federal loans or back state-chartered student loan companies.
How is this possible?
A deeply disturbing 🧵 (with zombies)
For as long as I've been in DC, companies like Missouri's student loan company @MOHELA and their lobbyists at @ncher_us @EFCTweets @SLSAorg fought tooth & nail to keep people trapped in debt and shield industry from justice.
Why do they have power? Why do they exist at all?
Before Congress ran banks out of student lending, state governments created private companies like @MOHELA to buy up loans backed by the feds.
Congress ended the bank-based loan program in 2010.
Student loan companies like @MOHELA had no purpose. They were the walking dead.
But because states allowed companies like @MOHELA to stick around, these firms reinvented themselves-- now as contractors handling student loans owned by the feds.
You might think this is insane (it is).
Why would @usedgov give taxpayer money to let these zombies shuffle along?
Crony capitalism, of course!
Back when Congress was killing the guaranteed loan program in 2010, it also had a chance to kill off these state-backed companies once and for all.
Lobbyists had Congress tell @usedgov to hand out federal contracts instead:
bit.ly/3UVTbAq
This is how YOU, a student loan borrower in 2022, have a zombie company like @MOHELA on the other end of the phone.
Even if you've never been to Missouri.
It's also why Missouri's Republican AG @AGEricSchmitt thinks he can try to block your right to debt relief.
So what can we do about it?
States can always kill the zombies. From California to Virginia, many states have made this choice over the past decade. The rest should follow.
The feds can kill the contracts, which is slower, but will starve the zombies.
Either way works for me.
On Tuesday, a judge in Missouri is going to consider whether to temporarily halt Biden's effort to #cancelstudentdebt.
storage.courtlistener.com/recap/gov.usco…
This case is a sham. It will fail in the end.
While we wait, it couldn't hurt to let @MOHELA know what we think about zombies.
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