Student loan borrowers ‘wildly’ mishandled by MOHELA: Dem

Since then, two advocacy groups have filed separate lawsuits against MOHELA, accusing the company of overcharging borrowers and denying help to those who have experienced misconduct at school. A spokesperson for MOHELA previously told Business Insider that “providing support to student loan borrowers is MOHELA’s highest priority and any claim to the contrary is false.”

However, MPs have argued that the trustee continues to harm borrowers and want the Department of Education to provide answers.

In light of the lawsuits’ allegations of MOHELA’s “billing errors, poor customer service record, and decisions to avoid public and private accountability at every turn, we request that ED immediately conduct an assessment of MOHELA’s compliance with its contractual obligations as of servicer, to share the key data. with our offices and with federal and state regulatory authorities and to act quickly to apply corrective measures, including potential termination of the federal MOHELA contract, if such action is warranted,” the lawmakers said.

They requested a range of information from the department regarding MOHELA by September 22, including the servicer’s performance metrics compared to other servicers and the number of complaints the department received from borrowers regarding MOHELA.

The Department for Education launched an accountability framework in December to ensure service providers meet their contractual obligations. Cardona said in a statement at the time that “The Department of Education will continue to engage in aggressive oversight of student loan providers and will put borrowers’ interests first.”

“When unacceptable errors are discovered, administrators should expect to be held accountable, and borrowers should rely on that administration to hold them harmless,” Cardona said.

Proceedings against MOHELA

In July, the American Federation of Teachers filed a lawsuit against MOHELA, accusing the company of illegally overcharging borrowers and providing them with inaccurate information that prevented them from getting lower payments and debt relief.

As one of the largest teacher unions in the US, many of AFT’s members qualify for Public Service Loan Forgiveness, which relieves student debt for government and nonprofit workers after 10 years of qualifying payments. The lawsuit said MOHELA failed to properly communicate billing changes to borrowers, leading to confusion and delays in providing relief.

In addition, a group of student borrowers in California filed a lawsuit on September 5 that accused MOHELA of failing to deliver debt owed to borrowers who experienced misconduct at school. Beginning in 2022, the Department of Education approved discharge for a number of for-profit schools, including Corinthian Colleges and ITT Technical Institute. However, the lawsuit said MOHELA defaulted on some of those loans already approved for discharge and has since failed to remedy the situation.

The lawsuits are still ongoing and are building on pressure from Democratic lawmakers to increase oversight of MOHELA. In February, Warren joined Senators Bernie Sanders and Chuck Schumer in calling for an investigation into MOHELA, and Warren later held a hearing in April to examine MOHELA’s performance.