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11:43

BRIEF

 * Education
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NEWS BRIEFS


MOHELA POINTS FINGER AT FEDERAL GOVERNMENT IN RESPONSE TO CRITICISM OF LOAN
PROGRAM

BY: ANNELISE HANSHAW - MARCH 1, 2024 11:43 AM



Public Service Loan applications are processed by federal agencies before
reaching the Higher Education Loan Authority of the State of Missouri, or
MOHELA. The loan servicer says the two-step process can "take months" (Getty
Images).

A Missouri-based loan servicing organization pushed back Friday on allegations
that it mismanaged a federal aid program, arguing the U.S. Department of
Education is partially to blame for complaints included in a recent report.

The Higher Education Loan Authority of the State of Missouri, better known as
MOHELA, said in an emailed statement to The Independent that the company follows
all guidelines laid out by the  U.S. Department of Education’s Office of Federal
Student Aid. That, the company said, may cause delays for borrowers.

“MOHELA does not have authority to process loan forgiveness until authorization
is provided by FSA, which can take months to occur,” the servicer wrote.

MOHELA is currently the defendant in two class-action lawsuits filed in the U.S.
District Court for the Eastern District of Missouri — one of which also cites
the Department of Education as a co-defendant. The lawsuits contend MOHELA’s
“failure to timely process and render decisions for student loan borrowers”
impacted people nationwide.

And on Wednesday, the American Federation of Teachers and the Student Borrower
Protection Center published a 47-page report detailing what they referred to as
MOHELA’s “servicing failures.”

MOHELA labeled the investigation a “PR campaign.”

> MOHELA faces accusations it mismanaged federal student loan forgiveness
> program



“It is unfortunate and irresponsible that information is being spun to create a
false narrative in an attempt to mislead the public. False accusations are being
disingenuously branded as an investigative report,” it said.

The organizations behind Wednesday’s report began publishing information on
MOHELA after the servicer was brought into a U.S. Supreme Court case that
eventually struck down widespread student-loan forgiveness. MOHELA said the
investigations make it seem as though it played an “active” role in the case
when in fact Missouri Attorney General Andrew Bailey brought MOHELA into the
case without its cooperation.

“The campaign claims that MOHELA was an active part of a legal challenge before
the Supreme Court that challenged President Biden’s student debt relief
proposal. This is false. MOHELA was not an active party in the case,” MOHELA
wrote.

The report alleged MOHELA wrongfully denied Public Service Loan Forgiveness
(PSLF) applications and padded its pockets doing so, which MOHELA denies.

“All borrowers entitled to PSLF are expected to receive it,” its spokesperson
told The Independent. “Loans that are eligible and qualified for PSLF
forgiveness are provided to MOHELA by the U.S. Department of Education’s Office
of Federal Student Aid for final processing and approval.”

FSA’s latest report on the status of PSLF applications, dated June 2023, says
almost 890,000 applications are in “active processing.” A year prior, a month
before MOHELA took over servicing of PSLF loans, the backlog was about 316,000
applications.

Borrowers have complained about long waits to receive approvals or denials, and
receiving information from MOHELA can be frustrating because of a communication
strategy that diverts them to the website.

In 2023, MOHELA fielded 1.3 million calls focused on Public Service Loan
Forgiveness, according to its spokesperson. The servicer’s website currently
warns of “high call volume.”

Democratic U.S. Senators, in a letter sent to MOHELA in July, said they were
concerned that some callers waited up to nine hours to reach a customer-service
representative.

In an expected surge of calls when student-loan-payments resumed in September,
MOHELA unleashed a series of “call-deflection” messages, as they are called in
the servicer’s communications playbook.

MOHELA said “call deflection” was a term used by FSA as it advised servicers to
push customers to self-service options.

“MOHELA was directed by FSA to refer borrowers to and encourage the use of
self-service options, whenever possible, to help manage the anticipated surge of
millions of borrowers returning to payment at a time when all federal loan
servicers were mandated by FSA to cut costs and limit customer service hours
despite the anticipated high demand,”  it said.

“‘Deflection’ was used by FSA in its overarching Return to Repayment Playbook
for servicers,” the statement continued.

MOHELA warned senators in August that rigid funding from the FSA would prohibit
it from adding staff specifically for the surge.

It earned $68.7 million in PSLF servicing fees in fiscal year 2023, according to
its financial statements.

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ANNELISE HANSHAW

Annelise Hanshaw writes about education — a beat she has covered on both the
West and East Coast while working for daily newspapers in Santa Barbara,
California, and Greenwich, Connecticut. A born-and-raised Missourian, she is
proud to be back in her home state.

MORE FROM AUTHOR

RELATED NEWS

MOHELA faces accusations it mismanaged federal… by Annelise Hanshaw February 29,
2024
Missouri company plays central role in downfall of… by Annelise Hanshaw June 30,
2023
Student debt relief scams on the rise. Here’s what… by Casey Quinlan September
29, 2023





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© Missouri Independent, 2024
1
X



MOHELA POINTS FINGER AT FEDERAL GOVERNMENT IN RESPONSE TO CRITICISM OF LOAN
PROGRAM

by Annelise Hanshaw, Missouri Independent
March 1, 2024

<h1>MOHELA points finger at federal government in response to criticism of loan
program</h1> <p>by Annelise Hanshaw, <a
href="https://missouriindependent.com">Missouri Independent</a> <br />March 1,
2024</p> <p>A Missouri-based loan servicing organization pushed back Friday on
allegations that it mismanaged a federal aid program, arguing the U.S.
Department of Education is partially to blame for complaints included in a
recent report.</p> <p>The Higher Education Loan Authority of the State of
Missouri, better known as MOHELA, said in an emailed statement to The
Independent that the company follows all guidelines laid out by the  U.S.
Department of Education’s Office of Federal Student Aid. That, the company said,
may cause delays for borrowers.</p> <p>“MOHELA does not have authority to
process loan forgiveness until authorization is provided by FSA, which can take
months to occur,” the servicer wrote.</p> <p>MOHELA is currently the <a
href="https://missouriindependent.com/2024/02/29/mohela-faces-accusations-it-mismanaged-federal-student-loan-forgiveness-program/">defendant
in two class-action lawsuits</a> filed in the U.S. District Court for the
Eastern District of Missouri — one of which also cites <a
href="https://www.sauderschelkopf.com/wp-content/uploads/2023/10/Morgan-v.-MOHELA-Complaint-as-filed.pdf">the
Department of Education as a co-defendant</a>. The lawsuits contend MOHELA’s
“failure to timely process and render decisions for student loan borrowers”
impacted people nationwide.</p> <p>And on Wednesday, the American Federation of
Teachers and the Student Borrower Protection Center published a <a
href="https://www.mohelapapers.org/">47-page report</a> detailing what they
referred to as MOHELA’s “servicing failures.”</p> <p>MOHELA labeled the
investigation a “PR campaign.”</p> <blockquote><p><a
href="https://missouriindependent.com/2024/02/29/mohela-faces-accusations-it-mismanaged-federal-student-loan-forgiveness-program/">MOHELA
faces accusations it mismanaged federal student loan forgiveness
program</a></p></blockquote> <p><iframe title="“MOHELA faces accusations it
mismanaged federal student loan forgiveness program” — Missouri Independent"
src="https://missouriindependent.com/2024/02/29/mohela-faces-accusations-it-mismanaged-federal-student-loan-forgiveness-program/embed/#?secret=WmHUW8bN0T#?secret=So4fluRKJG"
width="500" height="282" frameborder="0"></iframe></p> <p>“It is unfortunate and
irresponsible that information is being spun to create a false narrative in an
attempt to mislead the public. False accusations are being disingenuously
branded as an investigative report,” it said.</p> <p>The organizations behind
Wednesday’s report began publishing information on MOHELA after the servicer was
<a
href="https://missouriindependent.com/2023/06/30/missouri-company-plays-central-role-in-downfall-of-biden-loan-forgiveness-program/">brought
into a U.S. Supreme Court case</a> that eventually struck down widespread
student-loan forgiveness. MOHELA said the investigations make it seem as though
it played an “active” role in the case when in fact Missouri Attorney General
Andrew Bailey brought MOHELA into the case without its cooperation.</p> <p>“The
campaign claims that MOHELA was an active part of a legal challenge before the
Supreme Court that challenged President Biden’s student debt relief proposal.
This is false. MOHELA was not an active party in the case,” MOHELA wrote.</p>
<p>The report alleged MOHELA wrongfully denied Public Service Loan Forgiveness
(PSLF) applications and padded its pockets doing so, which MOHELA denies.</p>
<p>“All borrowers entitled to PSLF are expected to receive it,” its spokesperson
told The Independent. “Loans that are eligible and qualified for PSLF
forgiveness are provided to MOHELA by the U.S. Department of Education’s Office
of Federal Student Aid for final processing and approval.”</p> <p>FSA’s <a
href="https://studentaid.gov/data-center/student/loan-forgiveness/pslf-data">latest
report on the status of PSLF applications</a>, dated June 2023, says almost
890,000 applications are in “active processing.” A year prior, a month before
MOHELA took over servicing of PSLF loans, the backlog was about 316,000
applications.</p> <p>Borrowers have complained about long waits to receive
approvals or denials, and receiving information from MOHELA can be frustrating
because of a communication strategy that diverts them to the website.</p> <p>In
2023, MOHELA fielded 1.3 million calls focused on Public Service Loan
Forgiveness, according to its spokesperson. The servicer’s website currently
warns of “high call volume.”</p> <p>Democratic U.S. Senators, <a
href="https://www.warren.senate.gov/imo/media/doc/Letter%20to%20Servicers.pdf">in
a letter sent to MOHELA in July</a>, said they were concerned that some callers
waited up to nine hours to reach a customer-service representative.</p> <p>In an
expected surge of calls when student-loan-payments resumed in September, MOHELA
unleashed a series of “call-deflection” messages, as they are called in <a
href="https://www.mohelapapers.org/_files/ugd/588c1d_9eac9ec102be4cbd87a273896e0f1860.pdf">the
servicer’s communications playbook</a>.</p> <p>MOHELA said “call deflection” was
a term used by FSA as it advised servicers to push customers to self-service
options.</p> <p>“MOHELA was directed by FSA to refer borrowers to and encourage
the use of self-service options, whenever possible, to help manage the
anticipated surge of millions of borrowers returning to payment at a time when
all federal loan servicers were mandated by FSA to cut costs and limit customer
service hours despite the anticipated high demand,”  it said.</p>
<p>“‘Deflection’ was used by FSA in its overarching Return to Repayment Playbook
for servicers,” the statement continued.</p> <p><a
href="https://www.warren.senate.gov/imo/media/doc/Servicers%20Responses.pdf">MOHELA
warned senators in August</a> that rigid funding from the FSA would prohibit it
from adding staff specifically for the surge.</p> <p>It earned $68.7 million in
PSLF servicing fees in fiscal year 2023, <a
href="https://www.mohela.com/DL/common/publicInfo/financialStatements.aspx?idx=2023#:~:text=On%20April%2024%2C%202023%2C%20the,servicing%20contract%20through%20December%202024.">according
to its financial statements</a>.</p> <a href="/donate"> <div
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