Politics
Democratic Lawmakers Launch Inquiry Into MOHELA Over Erroneous Past-Due Notices
Sen. Elizabeth Warren and other Democrats are seeking answers after the student loan servicer mistakenly notified borrowers they were near default.
The short version
- Democratic lawmakers led by Sen. Elizabeth Warren launched an inquiry into student loan servicer MOHELA for sending mistaken past-due notices warning borrowers they were near default.
- Affected borrowers reported heightened distress and drops in credit scores, with some stating they had not received promised correction emails.
- Lawmakers are asking MOHELA to disclose how many borrowers were impacted, why the glitch occurred, and how long it took to notify customers.
- The U.S. Department of Education stated the issue affected a small number of borrowers at one servicer and promised affected individuals would be notified via email.
Key facts
- Sens. Elizabeth Warren, Jeff Merkley, and Ed Markey sent an inquiry to MOHELA regarding inaccurate past-due notices sent to loan borrowers.[Business Insider]
- An Education Department spokesperson stated the billing issue affected a small number of borrowers at one servicer and that correction emails would be sent.[Business Insider]
- Lawmakers requested details from MOHELA on the cause of the glitch, the number of borrowers affected, and the timeframe for issuing notifications.[Business Insider]
- In 2023, the Education Department withheld $7.2 million in pay from MOHELA after it failed to send timely billing statements to 2.5 million borrowers.[Business Insider]
What remains uncertain
- The exact number of borrowers impacted by the erroneous past-due notices remains unknown.[Business Insider]
- It is unclear what technical cause led to the inaccurate notices or how quickly MOHELA identified and corrected the system error.[Business Insider]