The American Federation of Teachers (AFT) and the Student Borrower Protection Center (SBPC) released the results of a years-long investigation into industry mismanagement of the student loan system.
“This report shines a spotlight on the incompetence, malfeasance, and blatant disregard of a company that should be trying to help borrowers achieve their dreams,” said AFT President Randi Weingarten. “It’s a scandal that has hurt millions — and it’s time MOHELA is held to account.”
Persis Yu
MOHELA executed a previously unknown “call deflection” strategy — denying service to borrowers harmed by the firm’s mishandling of millions of student loan accounts, said officials with AFT and SBPC, estimating that more than four-in-ten student loan borrowers in repayment with loans serviced by MOHELA experienced a servicing failure since loan payments resumed in September 2023, after a three-and-a-half-year-long pause on bills and interest charges.
“We had high hopes for MOHELA, but just like Navient, it decided to put profits over borrowers in flagrant disregard of the Biden Administration’s efforts to fix this country’s broken loan forgiveness system,” said Weingarten. “Time and time again, MOHELA has decided to thwart, rather than support, the president’s plans.”
The joint investigative report by SBPC and AFT revealed that servicing failures by MOHELA have left borrowers pursuing PSLF struggling with a months-long loan forgiveness backlog (currently consisting of over 800,000 unprocessed Public Service Loan Forgiveness forms). It alleges that documents expose a company-wide playbook utilizing a “call deflection” scheme, which diverts borrowers away from customer service representatives and ensuring that borrowers are caught in a byzantine loop of misinformation and false promises were unable to resolve servicing errors.
