Higher Education Loan Authority of the State of Missouri (MOHELA): Navigating Student Loan Servicing

The Higher Education Loan Authority of the State of Missouri (MOHELA) stands as one of the largest student loan holders and servicers in the United States. Established in 1981, MOHELA initially functioned as a quasi-governmental entity, participating in the Federal Family Education Loan Program (FFELP) for approximately three decades, overseeing loans guaranteed by the federal government. MOHELA's headquarters are located in St. Louis, Missouri.

MOHELA's Evolution and Role in Student Loan Servicing

Initially, MOHELA participated in the Federal Family Education Loan Program (FFELP), managing loans guaranteed by the federal government. After the FFELP program was abolished in 2010, MOHELA expanded its reach within the student loan servicing sector. MOHELA is dedicated to helping borrowers navigate their student loans.

Criticisms and Challenges Faced by MOHELA

MOHELA has faced considerable criticism, particularly regarding its handling of student loans transferred under its management. Borrowers have voiced concerns, leading to scrutiny from advocacy groups, elected officials, and government agencies.

Allegations of Mismanagement and Billing Errors

Numerous complaints have been lodged against MOHELA concerning its administration of the Public Service Loan Forgiveness (PSLF) program. In October 2023, the Department of Education announced that MOHELA would be penalized for sending late billing statements to 2.5 million student borrowers after payments resumed following a forbearance period that began in 2020. The loan servicer was penalized for allegedly sending untimely or incorrect billing statements to borrowers. More recently, MOHELA sent letters to borrowers containing misleading information about interest accrual; MOHELA subsequently issued a clarifying statement.

Lawsuits and Legal Disputes Involving MOHELA

MOHELA's practices have led to multiple lawsuits. In December 2023, a pair of student borrowers filed suit against MOHELA for its alleged mismanagement of the Public Service Loan Forgiveness (PSLF) program. The plaintiffs claimed that after becoming candidates for the program in August 2022, MOHELA did not respond to their requests, leading them to submit the request a year later. In January 2023, a class action lawsuit was filed against the Department of Education and MOHELA. Plaintiffs claimed that, despite servicing the PSLF program for more than a year before student loan payments resumed on Sept. In July 2024, the American Federation of Teachers (AFT) filed a lawsuit against MOHELA.

Customer Service Concerns and Call Deflection Tactics

MOHELA has also been accused of using controversial call deflection tactics, resulting in long call hold times and difficulty for borrowers trying to reach customer service agents.

MOHELA's Defense and Stance

Despite the criticisms, MOHELA has defended its practices, asserting its commitment to serving borrowers' best interests. MOHELA vehemently denied allegations of poor customer service or inadequate student loan servicing. "Any claims that MOHELA does not act in the best interest of the borrowers we serve as a federal contractor is simply not true,” said a MOHELA spokesperson last year in response to the SBPC and AFT report. "MOHELA's priority has always been on helping the student borrowers that we are here to serve while they navigate the often complex and overwhelming federal repayment process, and that is what we remain proudly committed to doing."

Department of Education Oversight and Actions

The Department of Education (ED) plays a crucial role in overseeing student loan servicers like MOHELA. The ED determines the eligibility of employment and payments towards PSLF. The Department of Education has, at times, defended MOHELA, suggesting improvements in its operations. The Department of Education under the Trump administration has defended MOHELA, arguing that its operations are improving. “MOHELA’s performance is steadily showing progress, and FSA’s focus remains on improving the borrower experience,” said Ursprung in her letter to Senator Warren last month, appearing to acknowledge that MOHELA’s loan servicing operations may have had some room for improvement. “The Department looks forward to continuing to review the performance of all our current contractors with the goal of improving service delivery on behalf of American students, their families, and taxpayers.”

Transfer of Student Loans from MOHELA

In response to concerns about MOHELA's performance, the Department of Education announced plans to transfer federal student loan accounts from MOHELA to other servicers. The Department of Education confirmed last month that it plans to transfer federal student loan accounts from MOHELA to other loan servicers later this year. “FSA is prioritizing efforts to improve customer service to students and parent borrowers,” said Sarah Ursprung, Acting Assistant Secretary for Legislation and Congressional Affairs at the Department of Education in a letter sent to Senator Warren last month. “FSA is collaborating with MOHELA to help the servicer manage the multiple strains on its portfolio to help drive overall improvement. As part of these efforts, FSA intends to transfer a portion of MOHELA’s PSLF portfolio to other servicers later this year.”

Potential Impacts of Loan Servicing Transfers

While transfers to different servicers may seem beneficial for borrowers frustrated with MOHELA, such transitions can sometimes create new problems. “Where a borrower’s data has become lost or corrupted as a result of poor data management by a particular servicer, subsequent transfers may result in servicers sending inaccurate periodic statements, borrowers losing progress toward forgiveness, and borrowers having difficulty in rectifying past billing errors,” said the Consumer Financial Protection Bureau in a 2022 report. The Department of Education sought to provide assurances that any student loan servicing transfers would go smoothly. “This work will be done thoughtfully and in a responsible way that avoids negative impacts to borrowers,” said Ursprung in her letter last month.

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Advice for Borrowers

The CFPB urges borrowers who may be subject to student loan servicing transfers in the coming months to remain vigilant. It's important to stay on top of your financial obligations.

MOHELA's Services and Borrower Assistance

MOHELA is dedicated to helping borrowers navigate their student loans. MOHELA is here to help answer any questions you may have, explore your benefits and repayment options, and process payments on your behalf. Welcome to MOHELA - the Missouri Higher Education Loan Authority - committed to excellent student loan servicing.

MOHELA and Public Service Loan Forgiveness (PSLF)

MOHELA's involvement with the Public Service Loan Forgiveness (PSLF) program has been a focal point of both praise and criticism. ED determines the eligibility of employment and payments towards PSLF. Waiting for forgiveness? we receive a file from ED. Please note: Refunds are issued directly from the Department of Treasury. payments because you were in an ineligible deferment or forbearance status. months in forbearance or deferment would result in forgiveness under PSLF or Temporary Expanded PSLF (TEPSLF). Department of Education, not MOHELA.

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