- Navient CEO Jack Remondi said he won’t sue Biden on his student-loan forgiveness plan.
- However, he did note his company would have standing to bring forth legal action.
- Some Republican lawmakers have expressed intent to pursue legal action to block the relief.
The head of a major student-loan company says he could sue President Joe Biden’s recent debt relief — but won’t.
During Barclay’s Global Financial Services Conference this week, student-loan company Navient’s CEO Jack Remondi joined to chat about Biden’s recent $20,000 loan forgiveness announcement at the end of August. It was a long-awaited decision — Biden pledged to approve $10,000 in relief on his campaign trail — but a controversial one nonetheless, given many Republicans have been pushing back on the relief since the president took office.
After the announcement, conservatives turned that pushback into threats of legal action, with prominent lawmakers like Texas Sen. Ted Cruz saying they were looking for ways to take the debt relief to court and attempt to block it. Remondi addressed those threats and said that Navient would “clearly” have the legal standing to challenge the policy because it owns loans within the Federal Family Education Loan (FFEL) program. Borrowers within that would not directly benefit from the relief since the loans are privately-held, so they would need to consolidate their loans into federal debt to qualify. This would materially affect Navient’s business.
But in terms of whether Navient will actually sue, Remondi said: “It won’t be us.”
“We don’t have any direct knowledge of who would be suing or not,” Remondi said. “It’s pretty clear that the precedent here requires someone to have standing in order to sue. We would clearly have standing as a holder of FFELP loans, but it’s not clear whether or not some political entity that might have standing in their state because of a state agency that owns FFELP loans will or will not decide to sue.”
Remondi also agreed with a question that noted that “it seems like a case of a lot of people hoping somebody else is going to sue, but it’s not clear who’s going to step up and fight that political battle.”
It’s something a lot of people are wondering about. Top Republican on the House education committee Virginia Foxx said during an event this week that she’s “open to suggestions” on ways to block Biden’s loan forgiveness in court.
“Right now, we don’t know exactly what’s going to happen,” she said. “But we do believe there will be actions that will come forward that will be able to stop it. And we’re working as hard as we can to find out what those are going to be.”
Biden’s administration said it has the authority to enact this one-time blanket relief under the HEROES Act of 2003, which gives the Education Secretary the ability to waive or modify student-loan balances in connection with a national emergency, like COVID-19. However, Republicans have argued the policy is an overreach of that authority.
Abby Shafroth, staff attorney for the National Consumer Law Center, also previously told Insider that it will be difficult to find a plaintiff that can successfully fight Biden’s debt relief in court — especially when it comes to the companies that service student loans since they make money through contracts with the government.
“Do they want to bite the hand that feeds them?” Shafroth said. “Also, I think the administration is in regular contact with the servicers and talks to them about what the administration is doing, and tries to find ways to design relief programs that are not going to really upset their services. So I think that there are a lot of sort of pragmatic reasons that I wouldn’t expect a servicer to bring a suit.”