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Stark black-and-white signs flanked a determined group of activists and legislators gathered on Capitol Hill May 22, amplifying their bold, unequivocal message: “Fire MOHELA.” Hosted by the Debt Collective, the event featured members of the Student Borrower Protection Center, the AFT and others who described how the notorious student loan servicer has abused borrowers with mishandled paperwork, misinformation, miscalculations and hourslong hold times. The group demanded that the government cut ties to stop the abuse.
“If we had done 1 percent of what MOHELA does, we’d get fired,” said AFT President Randi Weingarten. “It’s time to fire MOHELA.”
A labyrinth of frustration
After years of mismanaged student loan programs and multiple bad actors who profited from the student loan industry, the Biden administration has begun to make progress in cleaning up the system and bringing loan relief to thousands of borrowers. But MOHELA has thrown student debt back into a world of exploitation and profiteering.
“Any one of us could spend hours outlining the many ways in which MOHELA has failed our borrowers,” said Rep. Ayanna Pressley (D-Mass.). “The stories we’ve heard from borrowers are truly heartbreaking, they are infuriating, and they unfortunately have become far too common.” She listed high wait times—one protest sign showed a screen shot of a nine-hour wait on the phone—misleading information and incorrect billing amounts. One borrower described working with MOHELA as “a nightmare.”
According to a groundbreaking report, “The MOHELA Papers,” from the Student Borrower Protection Center and the AFT, 4 in 10 borrowers experience servicing failures at MOHELA, which at one point had a backlog of 800,000 Public Service Loan Forgiveness applications. The report also revealed a deflection scheme that deliberately delayed and dumped calls from people who needed to talk to a service representative in order to move their loan relief forward.
“These stories are not just statistics, they are lived experiences of our family members, our friends, our neighbors,” said Pressley. “These are the teachers, the nurses, the firefighters and young professionals who give back to our communities every day, who took on student loans with the hope of building a better future only to find themselves crushed under the weight of insurmountable debt.”
“This is an absolute disgrace,” said Sen. Ed Markey (D-Mass.), whose constituents have come to him describing the hardships they’ve faced because of MOHELA. While MOHELA stands for the Higher Education Loan Authority of the State of Missouri, Markey suggested it be known instead as the “Mismanagement and Offense in Higher Education Loan Authority.”
“It is time to listen to the borrowers that have been speaking up about the struggles that they have been facing,” said Rep. Ilhan Omar (D-Minn.). “It is time to stop [MOHELA’s] contract. It is time to fire them.”
The long fight back
The AFT has been fighting for student debt relief for years: The union sued Navient, another bad-actor loan servicer that blatantly exploited borrowers. The AFT also sued former Education Secretary Betsy DeVos’ administration for failing to clean up a Public Service Loan Forgiveness program designed to cancel debt for teachers, nurses and other public service workers who made loan payments for 10 years; because of a byzantine system full of obstacles, the program granted relief to only 2 percent of applicants. Both lawsuits were successful, and the PSLF program began to turn around once the Biden administration took over.
The AFT also supported President Joe Biden’s plan to relieve $10,000 to $20,000 in debt for every borrower (struck down by the Supreme Court in 2023) and has championed policy changes—including expanding eligibility for and loosening restrictions on PSLF and income-based repayment plans—that have resulted in a total of $167 billion in student debt relief for 4.75 million borrowers so far.
“This has been a long struggle,” said Weingarten, and MOHELA is only extending it. She recounted MOHELA’s history: Once it got its contract, it was the driver behind the Supreme Court case that stopped Biden’s broad-based relief. Then it set up its call-deflection scheme and an infrastructure that puts profits over people. And now it has threatened to sue over “The MOHELA Papers,” “because we get the facts out to the public,” said Weingarten.
“Now it’s time to fire them,” she said.
To understand the extent of MOHELA’s mismanagement, read “The MOHELA Papers” here.
[Virginia Myers]