Massachusetts Senator Elizabeth Warren demands answers from the CEO of MOHELA, a major student-loan company, as she calls for his testimony before the Senate banking committee next month.
The move comes amid growing concerns over MOHELA’s handling of the return to repayment and its administration of the Public Service Loan Forgiveness (PSLF) Program.
In a letter addressed to Scott Giles, the CEO of MOHELA, Warren invited him to testify on April 10 in a hearing titled “MOHELA’s Performance as a Student Loan Servicer.” The hearing aims to scrutinize MOHELA’s conduct since the resumption of repayment in the fall, particularly focusing on its compliance with contractual obligations and its management of the PSLF Program.
MOHELA made headlines as the first federal servicer to face repercussions from the Education Department for its failure to meet contractual obligations. In October, the department withheld over $7 million in payments from MOHELA due to its inability to provide timely billing statements to borrowers, coinciding with the resumption of loan repayments after a three-year hiatus.
Furthermore, MOHELA faces legal challenges, with two student-loan borrowers filing lawsuits in December alleging that the company delayed their PSLF applications and wrongfully demanded payments.
Warren’s letter to Giles underscored the impact of MOHELA’s actions on student loan borrowers, highlighting the company’s role in exacerbating the challenges faced by borrowers transitioning back to repayment amid the COVID-19 pandemic.
She emphasized the importance of Giles’ testimony in providing clarity on MOHELA’s performance as a loan servicer during a period of significant upheaval in the federal student loan program.
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Despite Warren’s efforts to hold MOHELA accountable, the company has remained silent on the matter, declining to comment on the senator’s request for testimony.
This isn’t the first time Warren has raised concerns about MOHELA’s practices. Alongside other Democratic lawmakers, she has previously called for investigations into the company’s conduct and urged action to protect borrowers’ interests.
While MOHELA’s shortcomings have drawn attention, it is not the only federal servicer under scrutiny. In January, the Education Department penalized Nelnet, Aidvantage, and EdFinancial for similar failures related to billing statements.
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The ongoing confusion surrounding loan status, particularly concerning PSLF eligibility, has left many borrowers disillusioned and financially strained. Despite some borrowers receiving loan forgiveness through PSLF, MOHELA’s subsequent reversal of these decisions has caused significant distress and uncertainty.
As Warren continues to press for accountability and transparency in student loan servicing, the upcoming Senate hearing represents a critical opportunity to address systemic issues and ensure borrowers receive the support and relief they deserve.
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