The moratorium on student loan payments has cost the federal government $160 billion in lost assets and the federal government should be ordered to force individuals with unpaid student loan debts to start repaying them, according to a nonprofit think-tank that is seeking a preliminary injunction against the Department of Education.
A copy of the motion, in case of Mackinac Center for Public Policy v. U.S. Department of Education et al. can be accessed by clicking here.
The suit was filed even after Miguel Cardona, the Secretary of Education, committed to resuming payments this year as planned when he testified at a Senate budget hearing.
A number of lawsuits have been filed against the government for extending the moratorium on student loan payments that was put in place more than three years ago at the start of the COVID-19 pandemic. The government last extended the pause back in November, as a means of waiting for legal challenges to its proposal to wipe out as much as $20,000 in student loan debt for each borrower are resolved. If the litigation is not resolved by June, payments will resume 60 days later, the Education Department said.
But that is not soon enough for the Makinac Center for Public Policy. “There is no reason to believe the current extension is the final one, as Defendants have already twice renewed purportedly ‘final’ extensions,” the group wrote in its filing.
The moratorium is costing the federal government $5 billion per month, mostly in the form of lost interest, the group said. “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,” it said.
The moratorium is also impacting Department of Education programs like the Public Service Loan Forgiveness program, which discharges debt for borrowers who work in public service jobs for 10 years after graduating from college.
