MOHELA’s Woes Could Be Chronic

MOHELA’s Woes Could Be Chronic

Months of Suffering under MOHELA Lead to Changes and Inquiries

It should be no shock to anyone familiar with the student loan world that federal loan servicer MOHELA has been in hot water lately, and it seems likely it’s going to stay that way. After months of negligence, a raft of borrower complaints, class-action lawsuits, and a damning exposé, Senators Elizabeth Warren, Chuck Schumer, and Bernie Sanders jointly called for an investigation into MOHELA’s failures to serve its clients. Senator Elizabeth Warren invited the servicing giant to appear before the Senate Subcommittee on Economic Policy to explain itself, which it refused

What’s Next for MOHELA and the Student Loan Borrowers that It Serves?

MOHELA’s response to Sen. Warren’s invitation follows an established pattern: servicers simply don’t want public scrutiny or to be held accountable. Instead, they proposed a series of closed door briefings in which they could explain their actions to the Subcommittee. The hearing went forward without MOHELA’s testimony, and Sen. Warren promised to “continue to press for answers,” sharing that she was “very concerned that MOHELA is trying to hide behind its quasi-public status to evade responsibility for its servicing failures and to try to duck out on the harm that it has inflicted on public servants.” 

Meanwhile, the Department of Education is already taking steps to take the reins from MOHELA. All federal student loan borrowers—including those not serviced by MOHELA—can expect their student loan servicers’ websites to change from “.com” to “.gov” in the coming months. Further, Federal Student Aid is taking direct control of PSLF servicing, beginning May 1st, no longer requiring borrowers to work with their servicer to track their forgiveness progress. With that change, borrowers pursuing PSLF will no longer be stuck with just one servicer, as they had been. Now, instead of just being serviced by MOHELA, PSLF borrowers will be served by any of the federal loan borrowers, which means that FSA could transfer some federal loans away from MOHELA. 

If you’re one of millions of student loan borrowers serviced by MOHELA and you have questions about how these hearings may impact you, give your student loan professional a call. They can help you navigate potential servicer changes, get your paperwork in order, and guide you through all the complexities of repayment and forgiveness. 

If you have Federal Student Loans, schedule your free 15-minute Discovery Session to find out if your loans can be forgiven after 25 years.