Matilda Morris Three prominent Democratic lawmakers are urging federal and state authorities to investigate a major student-loan company, alleging mismanagement of loan forgiveness programs for millions of borrowers.
Call for Investigation
Senate Majority Leader Chuck Schumer, along with Senators Elizabeth Warren and Bernie Sanders, issued a statement urging the Consumer Financial Protection Bureau (CFPB) and state attorneys general to probe MOHELA, a federal servicer based in Missouri. The lawmakers cited concerns over “student loan forgiveness mismanagement” based on internal documents obtained through Missouri’s Sunshine Law.
Allegations Against MOHELA
A report by the Student Borrower Protection Center and the American Federation of Teachers highlighted internal communications from MOHELA regarding its handling of the Public Service Loan Forgiveness portfolio. The documents revealed strategies such as “call deflection,” making it challenging for borrowers to reach customer service representatives.
Lawmakers’ Response
Expressing outrage at MOHELA’s actions, the lawmakers joined advocacy groups in calling for an investigation into the company’s practices. They emphasized the importance of ensuring that public servants, members of the military, and first responders receive the services they deserve.
Lack of Comment from MOHELA
Despite requests for comment, MOHELA did not respond to inquiries from Business Insider regarding the allegations.
Scrutiny of Federal Servicers
Federal student-loan servicers have faced increased scrutiny since the resumption of student-loan payments in October. The Education Department withheld millions in pay from MOHELA and other servicers for failure to provide accurate billing statements and address borrower concerns.
Previous Calls for Oversight
Lawmakers, including Senator Warren, have previously raised concerns about MOHELA’s billing communications and transparency. The Education Department has pledged to maintain oversight over servicers, outlining potential actions for non-compliance with contractual obligations.
CFPB’s Response
The CFPB has not yet commented on whether it will initiate an investigation into MOHELA’s practices, leaving the possibility open for further action in response to the allegations.
In summary, the call for an investigation underscores ongoing challenges within the student-loan servicing industry and highlights the importance of accountability in ensuring borrowers receive the support they need.
