STATEMENT: Borrower Advocates Applaud New MOHELA Enforcement Actions
“MOHELA has repeatedly demonstrated that it cannot and will not fulfill its most basic obligations to borrowers and this action is a step toward accountability”
BOSTON (October 17, 2024) – The Project on Predatory Student Lending (PPSL), the leading legal organization representing student borrowers against predatory for-profit colleges, applauded the Department of Education’s announcement that it will limit the federal student loan servicer Missouri Higher Education Loan Authority (MOHELA) from taking any new accounts and force it to follow a corrective action plan for its servicing failures.
The enforcement actions follow growing pressure on the servicer. Represented by PPSL, borrowers recently filed a lawsuit against MOHELA alleging that it failed to implement student loan discharges ordered by the Department of Education. The Department released these borrowers from any further obligation to repay their loans, but the lawsuit states that MOHELA never processed the promised discharges, never issued authorized refunds to the borrowers, continues reporting the debts to credit reporting agencies as current obligations, and has been illegally demanding payments from the student borrowers.
More than 50 members of Congress sent a letter to the Department of Education citing the lawsuit and urging the Department to “immediately evaluate whether MOHELA is meeting its contractual obligations as a student loan servicer.”
Statement from Eileen Connor, President and Executive Director of the Project on Predatory Student Lending:
"MOHELA has repeatedly demonstrated that it cannot and will not fulfill its basic obligations to borrowers, who have no ability to choose a different servicer, and this enforcement action is a step toward accountability. Not only has MOHELA failed to complete group discharges ordered by the Department of Education, it has profited from its own recalcitrance at the expense of taxpayers, billing the federal government for collection activity on loan accounts that should no longer exist. Today’s action by the Department indicates that it is finally listening to borrowers who have sounded the alarm on MOHELA’s misconduct. We urge the Department of Education to continue to take bold action to hold lenders and servicers accountable to students, taxpayers, and the law.”
PPSL also represents student borrowers in the Sweet v Cardona borrower defense settlement and in Villalba v ITT. Class members in both cases have had their hard-won relief stalled by MOHELA’s more than year-long failure to process their discharges.
About the Project on Predatory Student Lending
The Project on Predatory Student Lending (PPSL) is the leading legal organization representing student borrowers against predatory for-profit colleges and the policies that enable institutions to exploit and cheat students. PPSL uses bold, strategic litigation and advocacy to demand accountability in the higher education space and influence policy solutions to create a more just and affordable education system. PPSL represents more than one million student borrowers and its work has resulted in cancellation of more than $22 billion of fraudulent student loan debt.
