The Department of Education announced on Monday that it was withholding $7.2 million in payments for a student loan servicer — Higher Education Loan Authority of the State of Missouri, or MOHELA — because the servicer failed to send billing statements on time to 2.5 million individuals.
That’s Not All: The department also said it identified errors from other servicers the led to a “small” number of borrowers receiving incorrect payment amounts on their billing statements and some individuals who have pending Borrower Defense claims being placed incorrectly in repayment status.
What Happens Next: All affected borrowers will have their loans placed in forbearance until the issues are resolved and the amount of time the loans are in forbearance will count as credit toward loan forgiveness through the Public Service Loan Forgiveness or Income Driven Repayment plans.
What He Said: “The Biden-Harris Administration is looking out for borrowers at every step throughout their return to repayment,” said Secretary of Education Miguel Cardona. ”Our oversight efforts have uncovered errors from loan servicers that will not be tolerated. We took immediate actions to protect borrowers from the fallout of this error and hold the responsible servicers accountable, including by withholding $7.2 million in payment from one servicer. The actions we’ve taken send a strong message to all student loan servicers that we will not allow borrowers to suffer the consequences of gross servicing failures. We are committed to fixing our country’s broken student loan system, and that includes strengthening oversight and accountability and taking every step possible to improve outcomes for borrowers.”
