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Ten Democratic Senators are urging Education Secretary Miguel Cardona to hold a Missouri-based student loan company “accountable for its failures using the full extent of [his] authority.”
In a letter sent Thursday and provided first to Inside Higher Ed, the senators outline what they say are various failures by the Higher Education Loan Authority of the State of Missouri or MOHELA. More than 2.5 million borrowers were sent incorrect or late bills, among other failings, and the company’s customer service center had lengthy call wait times, averaging 38 minutes.
The department has withheld $7.2 million from MOHELA because of the billing mistakes, but the senators wrote that amount is a “a drop in the bucket” for the loan servicer. The Education Department paid MOHELA $180 million in fiscal year 2023, according to the letter. (After expenses, the company's netted $29.6 million.)
Of the four companies that manage federal student loans for the Education Department, MOHELA is not the biggest but has performed the worst since payments resumed, receiving the most complaints from borrowers, according to the senators.
Starting this month, the Education Department is transferring more than 1 million accounts from MOHELA to other servicers. MOHELA requested the transfer, according to the department.
Senator Elizabeth Warren, the Massachusetts Democrat who led the letter, held a hearing last month about MOHELA and released a report critical of how loan servicers managed the restart of student loan payments last fall following a three-year pandemic pause. According to the report, loan servicers collectively made more than 3.9 million billing-related errors during the return to repayment. MOHELA made 1.5 million more errors than the rest, per the letter.
”Given the sheer scope of MOHELA’s documented billing errors, poor customer service record, and other problems, alongside the company’s decision to avoid public and private accountability at every turn, ED should take further action to hold MOHELA responsible for its harms and to protect borrowers from future abuse,” the letter said.
The senators didn’t detail what specific actions they wanted Cardona to take, but requested a briefing by May 22.
