What is MOHELA, the Missouri agency at the center of the student debt relief court battle?

This week, President Joe Biden's plan to wipe away billions of dollars in student debt was halted by a panel of federal judges. The case in question stemmed from a challenge by six Republican-led states seeking to block the program, accusing the White House of overreaching its authority. One of the states involved is Missouri, and central to the state's argument (and the court's ruling) to block the program is a Missouri agency called MOHELA.

Here's what you need to know about MOHELA, Missouri's lawsuit to block student debt relief, and what could come next.

What is MOHELA?

MOHELA is the Higher Education Loan Authority of the State of Missouri. It's one of the largest holders and servicers of student loans in the country, and is based out of St. Louis. As of fall 2021, it was providing student loans to more than 2.7 million recipients and has a staff of over 500 employees (but has grown significantly over the past year).

Its mission, according to its government website, is to "eliminate barriers for students so they can access higher education."

MOHELA is not a direct arm of the government, but it is closely tied to state operations due to its financial obligations and leadership. Its board of governors consists of seven members: five appointed by the governor, the state commissioner of higher education and a member of the state coordinating board of higher education (that slot is currently vacant, according to its website).

MOHELA was tapped by the federal government in July to be the sole servicer involved with a federal waiver that allowed the remaining balance on student loans to be forgiven if 120 monthly payments had been made while working full-time.

What does MOHELA have to do with the student debt relief program?

In August, the White House unveiled its program to wipe away up to $10,000 of public student loan debt for millions of borrowers, and up to $20,000 for those who also received Pell grants. Elected Republicans (including Missouri's attorney general), who widely opposed the program, began to devise a plan to challenge it in court.

About a month later, lawsuits began to be filed in courts across the U.S. Among them was one from six states led by Republicans, including Missouri, filed in federal court in St. Louis. That petition offered a scathing rebuke of the program, calling it "economically unwise and downright unfair." But what would end up being key to their argument is how they justified the legal challenge.

The Missouri attorney general's office argued that the debt forgiveness program needed to be blocked because it would "harm the states' financial and proprietary interests." As evidence, they pointed to MOHELA — arguing that since the agency could see significant financial impact if loans were forgiven, so too would the state.

A federal judge in St. Louis didn't buy that argument. He dismissed the case for "lack of standing," which means he didn't believe the states adequately proved that they themselves were harmed enough to warrant the program being blocked. The program did "present important and significant challenges," however, wrote the judge, who was appointed by former President George W. Bush.

The states appealed the case up to the next rung of the judiciary, the Eighth Circuit Court of Appeals, to ask for another opinion. A three-judge panel, made up of a Bush appointee and two former President Donald Trump appointees, sided with the states and blocked the program. They wrote that MOHELA "may well be an arm of the State of Missouri" and agreed with Missouri that the state could see "financial harm" from the program.

Is MOHELA actually involved in the lawsuit? Where does it stand on the issue?

According to a letter from the agency to one of Missouri's members of Congress, MOHELA did not actively seek to involve itself in the lawsuit.

In a letter to U.S. Rep. Cori Bush's office in late October, responding to questions Bush posed in the wake of the lawsuit, the agency said its executives "were not involved with the decision." It describes itself as "a public instrumentality of the State of Missouri" and "a governmental entity."

The only official contact and communications between MOHELA and the AG's office on the matter, according to the agency, is when they received Sunshine requests asking for copies of MOHELA's contract with the federal government in August, September and October.

MOHELA declines in that letter to take a specific stance on both the debt relief program and the challenge to it.

Where does the student debt relief program stand now?

The White House program is not currently in effect. The Eighth Circuit's ruling, along with another ruling in Texas, means for now it cannot proceed. It remains to be seen how long it could be on pause.

What happens next with student debt relief?

There are a couple avenues available.

One is for the White House to extend the freeze on student loan payments. Biden's plan was originally to end the freeze when his student debt relief plan took effect. But with that plan now on hold, aides in the White House are discussing extending the pause on payments, The Washington Post reported on Monday. The payment moratorium was set to end in January.

The federal government could seek to appeal the case and bring it before the U.S. Supreme Court. But it remains to be seen whether the high court, held by a conservative majority, would accept such a case. An earlier request to hear a different lawsuit challenging the program was denied by Justice Amy Coney Barrett, a Trump appointee.

Galen Bacharier covers Missouri politics & government for the News-Leader. Contact him at gbacharier@news-leader.com, (573) 219-7440 or on Twitter @galenbacharier.

This article originally appeared on Springfield News-Leader: What to know about MOHELA and the court battle for student debt relief