Student loan servicer MOHELA faces new punishment from Biden administration
Source: Washington Post
October 16, 2024 at 4:15 p.m. EDT
The Biden administration is punishing the Missouri Higher Education Loan Authority, one of the largest federal student loan servicers, for errors in handling accounts, including the failure to process more than 460,000 applications for a popular repayment plan that could have saved borrowers money.
The Education Department will temporarily stop assigning new borrower accounts to the company, commonly known as MOHELA, which could cut into the servicer’s profits. The department has requested the company submit a plan for how it will correct the problems identified by the agency within 10 business days of notification.
“The Department continues to take swift action in response to errors that cause confusion or unnecessary difficulty for borrowers,” Education Secretary Miguel Cardona said in a statement to The Washington Post. “MOHELA’s continued challenges have resulted in less-than-satisfactory quality of servicing for borrowers.”
Since the department resumed collecting student loan payments a year ago, borrowers, advocacy groups and liberal lawmakers have complained that the companies that manage the government’s $1.6 trillion portfolio are doing a poor job. Servicers argue that they are contending with a barrage of directives from the Biden administration, stretching their resources. Conservative lawmakers say the department is using the contractors as scapegoats for their incompetence and to score political points ahead of the election.
Read more: https://www.washingtonpost.com/education/2024/10/16/mohela-student-loans-punishment/
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