- Conservative nonprofit Mackinac Center asked a federal court to immediately end the student-loan payment pause on Thursday.
- It first sued the Education Department last month to resume payments.
- The ongoing payment pause is currently set to end this summer.
A nonprofit conservative group asked a federal court last month to end the student-loan payment pause. It’s asking again — and it wants borrowers to be thrown back into repayment immediately.
On Thursday, The New Civil Liberties Alliance — a law firm aimed at protecting constitutional freedoms — filed a motion for preliminary injunction on behalf of the Michigan-based nonprofit Mackinac Center to end the student-loan payment pause immediately. In April, the group filed its initial lawsuit against the Education Department to end the pause and prevent a further extension. The pause is currently set to expire 60 days after June 30, or 60 days after the Supreme Court issues a final decision on the legality of Biden’s plan ot cancel up to $20,000 in student debt for federal borrowers, whichever happens first.
Thursday’s motion, filed in the US District Court for the Eastern District of Michigan, would effectively end the ongoing pause and resume payments as the legal process plays out.
“By keeping student loan interest rates at zero for the past 32 months (even while prime interest rates rose), the Department has unlawfully cancelled debt owed by every student-loan borrower to the U.S. Treasury in an amount equal to the interest that would have accrued over those 32 months,” the legal filing said. “A smaller portion of the overall cost to taxpayers is due to deferring all payment obligations during an inflationary period—a dollar repaid today is worth less than when Defendants first extended the Moratorium.”
The initial lawsuit detailed that as a nonprofit, employees who work at Mackinac Center would be eligible for the Public Service Loan Forgiveness (PSLF) program, which forgives student debt for government and nonprofit workers after ten years of qualifying payments. The group argued that the payment pauses have taken away the incentive to work in public service because the waived interest means that outstanding student debt that would be forgiven under PSLF “is less than it otherwise would be.”
Additionally, in Thursday’s complaint, the group claimed that not every student-loan borrower required the relief the payment pause brought.
“The Moratorium goes far beyond what is necessary to ensure borrowers are not placed by the pandemic in a worse position financially in relation to their loans,” it said. “To be sure, some borrowers were financially impacted by Covid-19, but others were not. Nationwide debt relief that fails to distinguish between the two groups provides an unlawful windfall to the latter. For instance, junior associates at major law firms saw their six-figure salaries increase throughout the pandemic.”
Amid conservative challenges to its student-debt relief, the Education Department has repeatedly said that the financial impacts of the pandemic can be long-lasting and extend beyond the existence of a national emergency declaration. After SoFi Bank — a student-loan refinancing company — filed a lawsuit in March to end the payment pause, the department said in a statement that it was “putting many at serious risk of financial harm.”
“The payment pause is legal, as is our plan to provide one-time debt relief to tens of millions of borrowers most at risk of delinquency and default when they return to repayment,” a department spokesperson told Insider at the time.
The department has yet to comment on Mackinac Center’s request for a nationwide injunction.