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Media Press Releases Advocates Applaud ED’s Announcement to Protect Borrowers by Removing More than One Million Borrowers from MOHELA After it Admits Its Inability to Properly Service Borrowers After Tripling Loan Volume

Advocates Applaud ED’s Announcement to Protect Borrowers by Removing More than One Million Borrowers from MOHELA After it Admits Its Inability to Properly Service Borrowers After Tripling Loan Volume

Advocates Urge Administration to Build on this Progress, Provide Debt Relief to Borrowers Due to Servicing Failures

April 29, 2024 | WASHINGTON, D.C. — Just weeks after the U.S. Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Economic Policy held a hearing entitled “MOHELA’s Performance as a Student Loan Servicer,” the U.S. Department of Education today announced that it would be removing more than one million federal student loan borrowers’ accounts from the Higher Education Loan Authority of Missouri (MOHELA)’s portfolio. Senator Elizabeth Warren called the MOHELA hearing immediately following the AFT and Student Borrowers Protection Center’s report, The MOHELA Papers, which found that 4-in-10 MOHELA customers experienced a servicing failure in the first few months of the return to repayment. 

In response, SBPC Executive Director Mike Pierce issued the following statement:

“Today, MOHELA surrendered more than 10 percent of its total loan servicing business, showing that its executives now recognize what borrowers have long understood: MOHELA’s position as a leader in the student loan industry was a mistake. We hope that Secretary Cardona builds on this progress and continues to protect borrowers by stripping the scandal-plagued firm of its remaining business.”

Student Borrower Protection Center Deputy Executive Director and Managing Counsel Persis Yu issued the following statement:

“The actions today are the inevitable result of a greedy corporation, MOHELA, biting off more than it can chew; and borrowers are getting spit out as a result. MOHELA recklessly chose to triple its loan volume despite an inability to serve those borrowers—evidenced by its complex call deflection scheme, which diverted borrowers away from help, even when it knew that millions of borrowers had problems that could only be solved by a live person. While we are glad that more than a million borrowers will no longer be subject to MOHELA’s abusive practices, transferring to a new servicer is not enough. It is time to fire MOHELA and it is time to cancel the loans of all borrowers who have been subject to servicing misconduct.”

Background on The MOHELA Papers

In February 2024, AFT and SBPC released the results of a years-long investigation into the student loan servicing industry, highlighting previously unpublished records and communications produced by MOHELA under Missouri state open records laws (The MOHELA Papers). 

This investigation alleged that approximately 4-in-10 MOHELA customers experienced a “servicing failure” during the student loan system’s return to repayment—the period following the three-and-a-half-year-long pause on student loan bills, interest charges, and debt collection implemented as a response to the COVID-19 pandemic. 

Over this period, AFT and SBPC found that MOHELA engaged in a practice known as “call deflection”—directing customers away from MOHELA’s understaffed call centers towards its website and other so-called “self-help” options. Records contained in The MOHELA Papers demonstrate that MOHELA was aware that broad categories of borrowers would be unable to obtain adequate customer service if deflected away from a call center, and even found instances where borrowers were deflected to inoperative pages on the company website, but nonetheless pursued this strategy even as millions of borrowers experienced problems due to MOHELA’s servicing failures.

Immediately upon publication of The MOHELA Papers, Senate Majority Leader Chuck Schumer, Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Bernie Sanders, and Senate Banking Economic Policy Subcommittee Chair Elizabeth Warren issued a joint statement calling for oversight and government action to protect borrowers. Shortly thereafter, Senator Warren called for the April 10 hearing.

On March 25, 2024, MOHELA sent SBPC a supposed “cease and desist” that called for advocates to retract the landmark report while threatening legal action based on its allegations that The MOHELA Papers’ “tone… is false and misleading.” In doing so, MOHELA confesses to a range of problematic practices. In response to these confessions, AFT and SBPC have petitioned Inspector General Sandra Bruce to audit MOHELA’s performance under its federal contracts.

Senator Warren invited MOHELA’s CEO, Scott Giles, to testify in the U.S. Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Economic Policy hearing entitled “MOHELA’s Performance as a Student Loan Servicer.” However, Giles refused to testify. 

Further Reading

The MOHELA Papers, a joint investigation into MOHELA by SBPC and AFT, is available at:

A copy of AFT and SBPC’s petition to ED’s Office of the Inspector General is available at:

A copy of the March 25, 2024 letter from MOHELA to SBPC is available at:

SBPC’s report series: Delivering Distress: How Student Loan Companies Cheat Borrowers Out of Their Rights

Proposal by Yael Shavit, Primary Negotiator for State Attorneys General of the 2023 Negotiated Rulemaking Student Loan Debt Relief Committee, to provide relief to borrowers whose ability to access loan relief has been compromised due to servicing misconduct is available at:

SBPC and AFT’s cease and desist letter to MOHELA: Missouri-Based Student Loan Giant Accused of Illegal Loan Servicing Practices, Scheme to Block Student Debt Relief for Millions of Borrowers


About Student Borrower Protection Center

Student Borrower Protection Center (SBPC) is a nonprofit organization focused on eliminating the burden of student debt for millions of Americans. We engage in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance racial and economic justice.

Learn more at or follow SBPC on Twitter @theSBPC.

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