Over 50 Members of Congress Call on Department of Education to Consider Terminating Contract with MOHELA

September 10, 2024

Over 50 Members of Congress Call on Department of Education to Consider Terminating Contract with MOHELA

Text of Letter (PDF)

Washington, D.C. - Today, U.S. Senator Elizabeth Warren (D-Mass.) and Representative Jim Clyburn (D-S.C.) led 56 of their colleagues in a letter to the Department of Education (ED), calling on the Department to conduct an analysis as to whether the Higher Education Loan Authority of the State of Missouri (MOHELA) has adhered to its contracts with the federal government, and if not, to consider terminating those contracts.

This letter comes after two new lawsuits brought by the American Federation of Teachers (AFT) and Project on Predatory Student Lending (PPSL) allege that MOHELA has mishandled its student loan servicing responsibilities.

"The new allegations raise even more concerns that MOHELA is wildly mismanaging its student loan portfolio and hurting borrowers-and suggest that more drastic ED measures are needed to protect borrowers and ensure MOHELA is fulfilling its contractual obligations," wrote the lawmakers.

On July 22, 2024, AFT filed a lawsuit against MOHELA that included new findings alleging that MOHELA violated ED guidance, including by:

1. Making unauthorized, automatic withdrawals from borrowers' accounts-sometimes for incorrect amounts-without borrowers' knowledge or permission,
2. Failing to accurately and timely process Income Driven Repayment (IDR), Public Service Loan Forgiveness (PSLF), and refund applications-causing clear financial harm to borrowers,
3. Improperly instructing borrowers enrolled in IDR plans to recertify their income and family size well in advance of the deadline to do so, meaning borrowers' payments increased before they should have, and,
4. Actively misinforming borrowers about their debt relief options.

Additionally, California borrowers and the Project on Predatory Student Lending filed a separate lawsuit last week alleging that MOHELA systematically denied debt relief to borrowers who were the victims of school misconduct.

"Under MOHELA's federal contract, the company has received $1.1 billion to date to service student loans for 8 million borrowers," wrote the lawmakers. "But what appear to be careless, blatant, and harmful violations of ED guidance exposed by the AFT and PPSL suits, suggest, once again, that MOHELA cannot be trusted to meet its contractual obligations as a federal student loan servicer."

Already, ED has begun to hold MOHELA accountable by withholding $7.2 million in payments from the servicers and by announcing the transfer of one million borrower accounts away from MOHELA.

"Given the new allegations raised in the AFT and PPSL suits, along with the concerns we already raised to ED in our May 2024 letter about 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 evaluation of MOHELA's fulfillment of its contractual obligations as a servicer, share key data with our offices and federal and state regulators, and act quickly to apply corrective measures-including the potential termination of MOHELA's federal contract if such action is justified," the lawmakers concluded.

Joining the letter in the Senate are Senators Blumenthal (D-Ct.), Brown (D-Ohio), Butler (D-Calif.), Duckworth (D-Ill.), Hirono (D-Hawaii), Luján (D-N.M.), Markey (D-Mass.), Merkley (D-Ore.), Sanders (I-Vt.), Van Hollen (D-Md.), Warnock (D-Ga.), Welch (D-Vt.), and Wyden (D-Ore.).

Joining the letter in the House are Representatives Adams (D-N.C.), Bonamici (D-Ore.), Bowman (D-N.Y.), Brownley (D-Calif.), Carter (D-La.), Casar (D-Texas), Chu (D-Calif.), Cohen (D-Tenn.), Dean (D-Pa.), DeSaulnier (D-Calif.), Doggett (D-Texas), Garcia (D-Calif.), Garcia (D-Texas), Goldman (D-N.Y.), Gomez (D-Calif.), Gottheimer (D-N.J.), Hayes (D-Ct.), Hoyle (D-Ore.), Huffman (D-Calif.), Jayapal (D-Wash.), Kennedy (D-N.Y.), Kim (D-N.J.), Lee (D-Calif.), McGovern (D-Mass.), Moore (D-Wis.), Norton (D-D.C.), Omar (D-Minn.), Pocan (D-Wis.), Porter (D-Calif.), Pressley (D-Mass.), Ramirez (D-Ill.), Raskin (D-Md.), Salinas (D-Ore.), Sánchez (D-Calif.), Sarbanes (D-Md.), Schakowsky (D-Ill.), Takano (D-Calif.), Thompson (D-Miss.), Waters (D-Calif.), Williams (D-Ga.), and Wilson (D-Fla.).

Senator Warren has led the fight to reform our higher education system, cancel student loan debt, and hold student loan servicers accountable:

• On August 9, 2024, Senator Warren and lawmakers launched an investigation into the reported mishandling of student loan transfers by MOHELA, Nelnet and credit reporting agencies.
• On August 8, 2024, Senator Warren and Representative Madeleine Dean led over 30 lawmakers in a letter urging student loan servicer Navient to reform its flawed process to cancel the private student loans of borrowers who attended fraudulent, for-profit colleges.
• On July 29, 2024, Senators Warren, Ron Wyden, Chris Van Hollen, and Bernie Sanders, sent a letter to Secretary of Education Miguel Cardona, cautioning the Department of Education on Federal Student Aid's transition to the Unified Servicing and Data Solution system.
• On July 22, 2024, Senators Warren, Schumer, and Sanders released a joint statement on the American Federation of Teachers' lawsuit against MOHELA for allegedly overcharging and misleading student loan borrowers.
• On May 23, 2024, Senators Warren and King led their colleagues in a letter to Education Secretary Miguel Cardona, urging them to provide guidance and communication to borrowers as the Public Service Loan Forgiveness program transfers from MOHELA to the Department of Education.
• On May 9, 2024, Senator Warren led a growing coalition of senators in urging the Department of Education to hold student loan servicer MOHELA accountable for its failures.
• On May 7, 2024, Senator Warren and 24 members of the U.S. Senate sent a letter to Senator Tammy Baldwin, Chair of the Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, and Senator Shelley Moore Capito, Ranking Member of the Subcommittee, encouraging them to provide $2.7 billion in funding to the Office of Federal Student Aid (FSA) in fiscal year (FY) 2025.
• On May 1, 2024, Senators Warren, Carper, Kaine, and Representative Don Davis (D-N.C.) called on the Department of Defense (DoD) to release data on the Postsecondary Education Complaint System (PECS), a centralized database to track complaints against schools who participate in the Tuition Assistance (TA) and My Career Advancement Account Scholarship (MyCAA) program.
• In April 2024, Senator Warren led eight of her colleagues in sending a letter to David L. Yowan, President and Chief Executive Officer of student loan servicer Navient, urging the servicer to cancel decades-old private student loans pushed onto borrowers attending fraudulent, for-profit colleges.
• In April 2024, Senators Warren, Blumenthal, Markey, and Van Hollen released a new report: Servicing Scandals: Student Loan Servicers' Failures During Return to Repayment, which reveals a decades-long pattern of student loan servicer incompetence and misconduct that has affected millions of borrowers nationwide.
• In April 2024, Senator Elizabeth Warren led a hearing on student loan servicer Higher Education Loan Authority of the State of Missouri (MOHELA) and its failures during borrowers' return to repayment, including MOHELA's mismanagement of the Public Service Loan Forgiveness program.
• In March 2024, Senators Elizabeth Warren and Ron Wyden (D-Ore.), Chair of the Senate Finance Committee, along with U.S. Representatives Ayanna Pressley (D-Mass.), Pramila Jayapal (D-Wash.), Raúl Grijalva (D-Ariz.), and John Larson (D-Conn.), led their colleagues in calling on the Social Security Administration (SSA), the U.S. Department of the Treasury (Treasury), and the U.S. Department of Education to end the practice of offsetting Social Security benefits to pay off defaulted student loans.
• In February 2024, Senator Warren, Majority Leader Chuck Schumer (D-N.Y.), and Senator Bernie Sanders (I-Vt.) released a statement calling for an investigation into student loan mismanagement by MOHELA.
• In January 2024, Senators Warren, Schumer, Sanders, Senator Raphael Warnock (D-Ga.), and Senator Alex Padilla (D-Calif.), along with Representative Ayanna Pressley, Assistant Democratic Leader Jim Clyburn (D-S.C.), Representative Frederica Wilson (D-Fla.), and Representative Ilhan Omar (D-Minn.), led their colleagues in calling on the Secretary of Education Miguel Cardona to host a fourth session of the student debt negotiated rulemaking to consider relief for borrowers experiencing financial hardship.
• In December 2023, U.S. Senators Warren, Richard Blumenthal, Ed Markey,, and Chris Van Hollen (D-Md.) sent follow-up letters to student loan servicers - MOHELA, EdFinancial, Nelnet, and Maximus - raising concerns about borrowers' problems with return to repayment, requesting information about the borrower experience, and pushing back on the servicers' claim that budget shortfalls limit their ability provide quality customer service to millions of borrowers.
• In December 2023, Senators Warren, Schumer, Sanders, Alex Padilla (D-CA), and Representatives Ayanna Pressley (D-Mass.), Ilhan Omar (D-Minn.), and Frederica Wilson (D-Fla.) sent a letter to U.S. Secretary of Education Miguel Cardona, urging him to leverage his existing and full authority under the Higher Education Act to provide expanded student debt relief to working and middle-class borrowers.
• In August 2023, Senator Warren, Congresswoman Ayanna Pressley, Senate Majority Leader Chuck Schumer (D-N.Y.), Senators Alex Padilla and Raphael Warnock (D-Ga.) and U.S. Representatives Ilhan Omar, Jim Clyburn, and Frederica Wilson led 79 other lawmakers in a letter to President Joe Biden, urging him to swiftly deliver on his promise to deliver student debt cancellation to working and middle class families by early 2024.
• In October 2022, Senator Warren and Representative Ayanna Pressley (D-Mass.) visited communities across Massachusetts to celebrate the Biden administration's student debt cancellation plan and help residents sign up for student loan relief.
• In October 2022, Senator Warren called on the Department of Education to hold for-profit colleges executives accountable for scamming students out of a quality education and loading them up with student debt.
• In March 2022, Senator Warren, along with Senate Democratic Whip Dick Durbin (D-Ill.), Senator Brown and Representatives Pramila Jayapal (D-Wash.) and Mark Takano (D-Calif.), urged Secretary of Education Miguel Cardona to swiftly discharge the loans of borrowers defrauded by predatory for-profit colleges and universities, including those operated by Corinthian College.
• In January 2022, Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representatives Jayapal, Pressley, Ilhan Omar (D-Minn.), and Katie Porter (D-Calif.) led more than 80 colleagues in a bicameral letter to the Department of Education calling for it to release the memo outlining the Biden administration's legal authority to cancel federal student loan debt and immediately cancel up to $50,000 of debt for Federal student loan borrowers.
• In October 2021, Senator Warren, along with Senator Markey and Representative Pressley, released a report that detailed the ongoing failures of the Public Service Loan Forgiveness program for public servants in Massachusetts.
• In April 2021, Senators Warren and Raphael Warnock (D-Ga.) led a group of colleagues in a letter to Education Secretary Miguel Cardona urging the Department of Education to take swift action to automatically remove all federally-held student loan borrowers from default.

###

Public link

Please use the above public link if you want to share this noodl on another website.