Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

A nonprofit just joined forces with a major student-loan lender in asking a federal court to end the payment pause, saying the relief has limited the 'financial incentive' to work in public service

A nonprofit just joined forces with a major student-loan lender in asking a federal court to end the payment pause, saying the relief has limited the 'financial incentive' to work in public service

The New Civil Liberties Alliance filed a lawsuit to end the current student-loan payment pause and prevent Biden from issuing another extension.
The lawsuits keep on coming to end President Joe Biden's student-debt relief.

On Thursday, the New Civil Liberties Alliance, a nonprofit law firm aimed at protecting constitutional freedoms, filed a lawsuit on behalf of the Mackinac Center, a nonprofit think tank based in Michigan that advocates for limited government. The lawsuit targets Biden's continued extensions of the student-loan payment pause, and it asks the federal court in the Eastern District of Michigan to end the current pause and prevent Biden from issuing a further extension.

After Biden announced up to $20,000 in broad student-debt relief at the end of August, two conservative-backed lawsuits paused the plan's implementation. As a result, Biden extended the student-loan payment pause, with waived interest, through 60 days after June 30, or 60 days after the Supreme Court issues a final decision on the relief's legality, whichever happens first.

But Mackinac Center wrote in its complaint that "only Congress can categorically suspend repayment obligations for all student-loan borrowers nationwide. And only Congress can cancel the accrual of interest on student debt owed to the United States."

"The Department initially claimed a short extension was needed to enable Congress to decide whether to extend the suspension legislatively," the complaint said. "But electorally accountable lawmakers in Congress declined to extend the suspension of payment obligations and interest accrual any further, even as they repeatedly legislated all manner of other forms of Covid-19 relief. So, the Department apparently decided to ignore the law and extended the Payment-and-Interest Pause by administrative fiat."

The key argument the group is making relates to the Public Service Loan Forgiveness (PSLF) program, which is intended to forgive student debt for government and nonprofit workers after ten years of qualifying payments. It wrote in its complaint that as a nonprofit, PSLF offers an incentive for people with student debt to work at the group, but the payment pauses have taken away that incentive.

"If interest continues to accrue, then a borrower's outstanding debt that will be forgiven under PSLF after ten years is greater than if interest does not accrue. The borrower therefore has greater incentive to work for a public-service employer and to have that debt forgiven under PSLF. In other words, the benefit public-service employers receive under PSLF is greater if interest continues to accrue on student debt than if interest does not accrue," the complaint said.

"Conversely, if interest stops accruing, outstanding debt that will be forgiven under PSLF is less than it otherwise would be," it continued. "The financial incentive to work for a public-service employer thus falls commensurately."

The libertarian think tank Cato Institute filed a lawsuit in October challenging Biden's broad debt relief and used a similar argument, saying that the relief would undermine hiring efforts under PSLF. That lawsuit did not progress.

Still, Mackinac Center joins the efforts of SoFi Bank — a student-loan refinancing company — that filed a lawsuit last month to end the payment pause, and at the very least, return borrowers ineligible for Biden's broad debt relief back into repayment. The bank cited revenue loss that is said was directly caused by the continued payment pause extensions.

The Education Department has not yet commented on this lawsuit, but it previously said that SoFi's challenge would put millions of borrowers "at serious risk of financial harm."
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
×