In just a few years, student loan servicer MOHELA has quickly evolved from small-time regional company to rising powerhouse to embattled behemoth. The Missouri Higher Education Lending Authority began as a quasi-state government agency tasked with overseeing local student loans. After the collapse of FedLoan, one of the largest federal direct student loan servicers—following a litany of investigations and lawsuits—MOHELA took on a huge portfolio of federal loans, including all of those for borrowers pursuing Public Service Loan Forgiveness. The rapidly growing company soon faced its own problems, however, leading to a damning exposé that outlined a host of abuses, which prompted an invitation to Capitol Hill to explain themselves.
Despite measures taken by the Department of Education to reduce its workload, MOHELA continues to underperform. Initially, the Dept. had MOHELA moved its website to a new platform that would better interface with Federal Student Aid. Soon after, it made this switch for all federal loan servicers while also removing the burden of exclusively servicing PSLF from MOHELA. These changes, unfortunately, did little to improve its performance, and the Dept. announced late last year that it would stop awarding it new accounts. Meanwhile, borrowers who still have MOHELA continue to suffer from its lackluster performance. The organization is currently facing a lawsuit from the American Federation of Teachers and is being investigated by several state attorneys general.
If all that wasn’t bad enough, in the midst of legal scrutiny, MOHELA continues its pattern of confusing—perhaps even misleading—direction for its clients. Earlier this month, it informed borrowers that they may need to renew their IDR plans, which no other servicer has done. It also notified some borrowers on the SAVE plan—which is currently frozen, with borrowers placed in administrative forbearance—that their interest would begin accruing again, which was not true. It’s impossible at this point to say if these announcements were made in simple error, but they speak to the ongoing culture of confusion that borrowers have had to endure ever since MOHELA entered the federal loan market in 2020.
If MOHELA is your servicer and you’ve received either of these notices, give us a call. We can help you determine what you may or may not need to do. We’re always available to answer your questions and help clear a way through the cloud of confusion.
