Federal student loans company MOHELA is due before a Senate hearing to testify over the alleged mismanagement of student loan forgiveness processes and decisions.
In a March 18 letter to MOHELA CEO Scott Giles, Massachusetts Senator Elizabeth Warren invited him to testify before the Senate Committee on Banking, Housing, and Urban Affairs’ Subcommittee on Economic Policy.
It comes after a joint report by the American Federation of Teachers and the Student Borrower Protection Center detailed MOHELA’s “servicing failures.” The report alleges that MOHELA failed to “perform basic servicing functions” and operated a “call deflection” scheme for borrowers.
MOHELA, also known as the Missouri Higher Education Loan Authority, is one of the largest federal student loan servicers in the country. According to the release issued by Warren on March 18, the company services millions of borrower accounts.
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In her letter, which cites the report, Warren alleged that MOHELA “contributed to student loan borrowers’ difficulties by mishandling borrowers’ return to repayment following the COVID-19 pandemic-related pause on payments, interest, and collections and by impeding public servants’ access to PSLF relief.”
Newsweek contacted MOHELA for comment via email outside of normal working hours.
Public Service Loan Forgiveness (PSLF) allows qualifying federal student loans to be wiped following 120 payments, or 10 years, for those working in a qualifying public service role. Careers covered by PSLF include the military, government service jobs, firefighting and nursing, among others.
“Your testimony will provide you with an opportunity to offer context on MOHELA’s role as a student loan servicer at a time of significant transition for the federal student loan program,” Warren wrote in the letter.
Following the publication of the report by American Federation of Teachers and the Student Borrower Protection Center, MOHELA told USA Today: “It is unfortunate and irresponsible that information is being spun to create a false narrative in an attempt to mislead the public. MOHELA remains committed to helping the millions of student loan borrowers that we serve.”
According to a report by Business Insider, Warren has previously joined with Senate Majority Leader Chuck Schumer and Senator Bernie Sanders urging the Consumer Financial Protection Bureau and state attorneys general to “investigate MOHELA and pursue action to the fullest extent possible under the law. Our nation’s public servants, members of the military, and first responders deserve far, far better.”
Warren has also previously questioned the CEOs of student loan servicers PHEAA and Navient through hearings in Congress.
Newsweek also contacted Warren for comment via email outside of normal working hours.
MOHELA is currently the defendant in a class-action lawsuit filed in the U.S. District Court for the Eastern District of Missouri, which accuses MOHELA of “failure to timely process and render decisions for student loan borrowers.” The case also cites the U.S. Department of Education as a co-defendant.
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