Key facts
- MOHELA sent incorrect past-due notices to student-loan borrowers, stating they were approaching default when they were not.
- Sens. Elizabeth Warren, Jeff Merkley, and Ed Markey are investigating MOHELA's error.
- Lawmakers are requesting details on the number of affected borrowers, the cause of the glitch, and the servicer's response time.
- Some borrowers reported not receiving correction emails and experiencing drops in their credit scores.
- The error has caused distress and potential financial harm to borrowers.
- MOHELA previously faced penalties from the Education Department for failing to send timely billing statements.
Democratic lawmakers are demanding answers from student-loan servicer MOHELA following the distribution of incorrect past-due notices to borrowers. Senators Elizabeth Warren, Jeff Merkley, and Ed Markey have initiated an inquiry into the company, seeking clarification on the scope and cause of the errors that wrongly informed borrowers they were nearing default.
The lawmakers' request aims to understand how many borrowers received the inaccurate notices, the technical or procedural reasons behind the glitch, and the timeline MOHELA took to inform affected individuals of the mistake. The Education Department has acknowledged awareness of the issue, stating that a small number of borrowers at one servicer were impacted and would be notified via email.
However, some borrowers have reported not receiving these corrective emails and have experienced negative consequences, including drops in their credit scores. The senators highlighted that the error has been "highly distressing" and could lead to direct financial harm, potentially causing borrowers to make unnecessary payments based on false delinquency information.
This is not the first time MOHELA has faced scrutiny. The servicer has previously been investigated by lawmakers and the Biden administration for failing to meet its contractual obligations. In 2023, the Education Department withheld $7.2 million in pay from MOHELA for failing to send on-time billing statements to approximately 2.5 million borrowers, which resulted in over 800,000 of them being incorrectly marked as delinquent.
One MOHELA borrower, Daniela Perez, described receiving the mistaken notices as a source of significant anxiety, particularly when faced with a claimed balance of $10,635. Borrowers have reported various other errors following President Donald Trump's student-loan repayment overhaul, despite the Education Department's stated monitoring of servicers. A Government Accountability Office report from March indicated that the department had ceased assessing servicers on billing accuracy.