Arguing that the ongoing student loan payment pause is unlawful, a Michigan legal advocacy organization wants a federal judge to force the Education Department to restart payments.
Backed by the New Civil Liberties Alliance, the Mackinac Center for Public Policy filed a motion for a preliminary injunction Thursday in federal court as part of its lawsuit challenging the pause, which is the second to do so. The pause costs $5 billion a month, according to the filing, and has harmed the nonprofit’s ability to recruit employees.
The organization wrote that the pause undermines the Public Service Loan Forgiveness program, which discharges debt for borrowers who work in public service jobs for 10 years.
“Government actions that take away these PSLF subsidies necessarily injure public-service employers like plaintiff by increasing their labor costs and undermining recruitment,” the filing states. “With each passing month, this injury grows as the moratorium further erodes PSLF subsidies by erasing another $5 billion of student-loan debt.”
The pause is set to end this summer, and payments will resume 60 days after June 1, at the latest. Education Secretary Miguel Cardona committed on Thursday during a Senate budget hearing to resuming payments this year as currently planned.
Lawyers for the Mackinac Center questioned in the filing if payments will actually resume.
The administration has repeatedly pointed to the COVID-19 national emergency as justification for the pause, but the federal public health emergency ended Thursday—increasing the likelihood that payments will resume later this year.
“The CARES Act’s six-month student-loan debt payment pause reflected Congress’s considered judgment for when payments and interest must resume,” said Sheng Li, litigation counsel for NCLA, in a statement. “The Department of Education had and has no authority to override that judgment.”