The servicer gave inadequate notice for payment reinstatement and put borrowers into delinquency.
The Department of Education has announced steps it will take to hold student loan servicer Missouri Higher Education Loan Authority (MOHELA) accountable for the late statements it issued to 2.5 million borrowers. MOHELA’s failure to “meet its basic obligation” gave borrowers only a few days to submit their student loan payments. This resulted in more than 800,000 of its borrowers wrongly being put into delinquency status by the loan company.
In response, the Department of Education is withholding $7.2 million of its October payment to MOHELA and will not be paying them until the issue is rectified. Officials also required MOHELA to put all affected borrowers in forbearance while the issue remains unresolved.
“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,” said Education Secretary Miguel Cardona. “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.”
As the Lord Leads, Pray with Us…
- For loan servicers to follow federal regulations regarding communications with borrowers.
- For Secretary Cardona to seek God’s direction as he heads the Education Department.
- For COO Richard Cordray as he oversees the Office of Federal Student Aid.
Sources: NPR, The Hill
