MOHELA allowed the backlog of unprocessed forms in the Public Service Loan Forgiveness program to grow to 800,000

Letter Text (PDF)

Washington (March 15, 2024) - Senator Edward J. Markey (D-Mass.), a member of the Senate Health, Education, Labor and Pensions Committee,led Leader Chuck Schumer (D-N.Y.), and Senators Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), Kirsten Gillibrand (D-N.Y.), Richard Blumenthal (D-Conn.), and Peter Welch (D-Vt.) in demanding Scott Giles, chief executive officer of the federal student loan servicer of the Higher Education Loan Authority of Missouri (MOHELA), remedy harms to borrowers following an exposé of egregiously unacceptable business practices.  

The senators expressed concern over the evidence uncovered in the “MOHELA Papers,” a report authored by the Student Borrower Protection Center and the American Federation of Teachers. The report details a complex“call deflection” scheme, inwhich MOHELA intentionally directed borrowers away from customer service representatives even though many loan services, such as resolving disputes and issuing refunds, require a customer service representative. The report also demonstrates that MOHELA allowed the backlog of unprocessed forms in the Public Service Loan Forgiveness program to grow to 800,000.

In their letter, the senators wrote, “Our offices have been deluged with complaints from constituents with loans serviced by your organization, the Higher Education Loan Authority of the State of Missouri (MOHELA) . . . MOHELA has consistently failed borrowers and must immediately act to remedy the harm that has resulted from their egregiously unacceptable business practices.”

The senators continued, “As the MOHELA Papers makes clear, this is more than neglect. MOHELA has engaged in a pattern of actively confusing and misleading the borrowers who rely on its services. Borrowers deserve better than the incompetence and callousness they have been forced to navigate.”

To understand how MOHELA plans to fix its broken customer and loan service, the senators called on MOHELA to respond to questions by April 1, 2024, including:

1. Please describe MOHELA’s plan to reform its “call deflection” scheme so that borrowers who wish to speak to a customer service representative can do so without delay.
2. Please describe the role that senior leadership at MOHELA played in developing its "call deflection" scheme, including how this scheme was approved prior to the restart of payments.
3. Please describe how MOHELA plans to address the backlog of 800,000 unprocessed Public Service Loan Forgiveness forms. What is the timeline for MOHELA to process this backlog?

In November 2023, Senators Markey and Warren led their colleagues in a letter to MOHELA demanding that the loan servicer immediately update borrowers on its most recent error that resulted in 2.5 million borrowers placed into administrative forbearance. In July 2023, Senator Markey and his colleagues sent letters to the federal loan servicers MOHELA, Nelnet, EdFinancial, and Maximus Federal Services Inc. requesting information about their plans to support the more than 40 million federal student loan borrowers who will soon resume payments on their student loans.

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