Lawmakers: “MOHELA must get its house in order immediately.”

Letter Text (PDF)

Washington (November 7, 2023) Senator Edward J. Markey (D-Mass.), a member of the Senate Health, Education, Labor and Pensions Committee, and Senator Elizabeth Warren (D-Mass.) led their colleagues Senators Chris Van Hollen (D-Md.) and Richard Blumenthal (D-Conn.) in sending a letter to Scott Giles, chief executive officer of the Higher Education Loan Authority of Missouri (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. The senators also expressed concern that MOHELA has caused confusion and financial distress by failing to inform borrowers on actions taken by the Department of Education to provide additional consumer protections during the administrative forbearance period, and in some cases, peddling contradictory information.

The lawmakers wrote, “This is not the first time MOHELA has failed to provide clear, timely, and accurate loan-status information to borrowers. We demand that MOHELA immediately update borrowers of its most recent error and the impact on their loans, and take concrete steps to improve overall customer service and communication.”

The lawmakers continued, “Borrowers rightly rely on MOHELA for timely and accurate loan information to ensure they make timely and accurate loan payments. Your failure to meet this basic and fundamental loan-servicing responsibility places hundreds of thousands of borrowers at risk of financial anxiety and insecurity. MOHELA must get its house in order immediately.”

MOHELA services eight million of the more than 40 million borrowers who have recently returned to repayment after nearly three years of paused payments and interest accrual. MOHELA has made repeated mistakes since the pause was lifted, including using outdated poverty guidelines and billing low-income borrowers higher payments than necessary. Recently, MOHELA failed to meet requirements to send billing statements to 2.5 million borrowers on time, leaving 830,000 borrowers delinquent on their loans in the first month of repayment. As a result, the Department of Education directed MOHELA to place all affected borrowers on administrative forbearance, adjust to zero any interest that accrues during the forbearance, and count time spent in forbearance towards public service loan forgiveness and income-driven repayment plan subsidies.

In the letter, the senators called on MOHELA to respond to the following questions by November 21, 2023:

  1. Please describe MOHELA’s planned outreach to borrowers on administrative forbearance regarding:
    1. MOHELA’s errors that resulted in the administrative forbearance;
    2. the consequences of administrative forbearance;
    3. the additional protections that the Department has offered to affected borrowers, including zero-interest accrual and credit towards Public Service Loan Forgiveness and Income-Driven Repayment;
    4. the timeline to transition borrowers off administrative forbearance and back on repayment; and
    5. ensuring notice to borrowers at least 21 days ahead of their return to repayment, including the date of their next payment and the amount.
  2. Please provide copies of all notices, factsheets, customer service scripts, or any other information provided by MOHELA to borrowers regarding these errors, their implications, and how they will be resolved.
  3. How many borrowers have declined or requested to end their administrative forbearance since October 1, 2023, if they were placed in forbearance for MOHELA’s mistakes rather than as is standard for pending income-driven repayment applications?
  4. How many complaints about errors with calculating monthly payment amounts has MOHELA received from its borrowers since September 1, 2023?
  5. Your response to our July 18, 2023 letter stated that, to ensure the accurate calculation of monthly payments, MOHELA utilizes “a system of record” that “calculates the appropriate payment amount based on data, and the calculations are embedded in the system of record to comply for the particular plan for any Income Driven plans or Standard Repayment (Standard, Graduated, etc.), plans.” Given evidence of incorrectly calculated monthly payments, what steps has MOHELA taken to evaluate the system of record or the calculations?
  6. Please describe how MOHELA obtains the information that it uses to calculate borrowers’ monthly payments and any policies or procedures used to ensure the accuracy and completeness of that information, including whether this information is received from prior student loan servicers as part of any account transfer or whether the information is provided by the Department.

Ahead of the return to student loan payment after three years, the senators sent letters to MOHELA and other loan servicers on September 28th and July 19th, requesting information about whether the servicers were prepared to support borrowers amid reports of widespread errors and confusion.