The student loan company, MOHELA, is in hot water for allegedly profiting from a backlog of Public Service Loan Forgiveness (PSLF) applications.
With nearly a million unprocessed forms, it is alleged that MOHELA incorrectly told some borrowers they didn’t qualify for the program, and inaccurately counted the payments borrowers made to be eligible for full relief.
Public Service Loan Forgiveness allows student loan borrowers who work in public service-oriented jobs; for example, teachers or government employees, to have their loans fully canceled if they have made payments for 10 years.
The American Federation of Teachers and the Student Borrower Protection Center are also accusing MOHELA of engaging in a “call deflection scheme” by strategically avoiding borrowers who needed help.
The Education Department said the Biden administration has made clear it will not let borrowers pay for the actions of student loan companies. In October, the feds issued a $7.2 million penalty to MOHELA for failing to send millions of borrowers their bills on time when payments resumed, which in turn made borrowers delinquent.
In a statement this week, Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Elizabeth Warren, D-Mass., chastised MOHELA over the conduct described in the report.
“Our nation’s public servants, members of the military, and first responders deserve far, far better,” they wrote.
“What has happened here is a pattern and practice of greed,” said Randi Weingarten, the president of the American Federation of Teachers.
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