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Media Press Releases Advocates Warn Watchdogs of Trump Scheme to Protect Corrupt Student Loan Giant MOHELA

Advocates Warn Watchdogs of Trump Scheme to Protect Corrupt Student Loan Giant MOHELA

As Right-Wing Lawmakers Try to Gut the Student Loan Safety Net and Muzzle Regulators, AFT and SBPC Call on Inspectors General to Probe Corruption at ED and CFPB

May 7, 2025 | WASHINGTON, D.C. — Today, AFT and Student Borrower Protection Center (SBPC) sent a letter to the Inspectors General for the U.S. Department of Education (ED) and the Consumer Financial Protection Bureau (CFPB) providing the independent watchdogs with new evidence that senior officials in the Trump Administration are conspiring to block oversight over the Missouri Higher Education Loan Authority (MOHELA). Last month, Yahoo Finance reported that nine state attorneys general and financial regulators had opened probes of the scandal-plagued student loan company—investigations reportedly slowed by efforts to dismantle the federal agencies tasked with protecting borrowers. 

“The existence of these open investigations, which were not previously public, sheds new light on the alleged abuses committed by the scandal-plagued student loan giant,” said AFT President Randi Weingarten and SBPC Executive Director Mike Pierce in their letter. “Officials at the highest levels of the Trump Administration may be working to deny justice to borrowers harmed by MOHELA.”

A copy of the letter to the Inspectors General for ED and CFPB sent by AFT and SBPC is available here: https://protectborrowers.org/wp-content/uploads/2025/05/OIG-Letters-on-MOHELA.pdf

This new reporting adds to a growing body of evidence uncovered in litigation against the Trump Administration that both agencies are failing to uphold their legal obligations to oversee the student loan marketplace and protect borrowers. It also raises new concerns about the role that Acting Under Secretary James Bergeron, a former student loan industry lobbyist, may have played in this scheme.

“Given Bergeron’s background as a student loan lobbyist working on MOHELA’s behalf and new evidence that actions taken under Bergeron’s oversight may have impeded law enforcement scrutiny of his former client, it is critical that both of your offices scrutinize Bergeron’s role, specifically,” continued Weingarten and Pierce in their letter. 

The vast majority of MOHELA’s student loan business stems from government contracts, collectively worth billions of dollars, awarded to the firm to service and collect on loans owned by the federal government. This is the second time AFT and SPBC have petitioned ED’s Office of the Inspector General (ED OIG) to audit practices related to MOHELA. In March 2024, the organizations provided ED OIG with a letter sent by MOHELA to SBPC admitting to a wide range of unlawful and improper activities.

This Yahoo Finance report comes more than one year after SBPC and AFT published The MOHELA Papers and nine months after AFT filed a consumer protection lawsuit against MOHELA for mismanaging the accounts of millions of borrowers and allegedly illegally overcharging and misleading borrowers on their monthly bills.

Background

Throughout its brief tenure as a dominant participant in the student loan servicing market, MOHELA has shown it is unable to operate without causing widespread financial harm to millions of people.  

  • In October 2023, ED disclosed that MOHELA failed to send monthly student loan bills to 2.5 million borrowers, resulting in 800,000 borrowers missing a monthly payment.
  • In February 2024, AFT and SBPC published The MOHELA Papers, the product of a years-long investigation into the company’s mismanagement of its federal student loan servicing business.
  • In March 2024, AFT and SBPC petitioned the ED OIG to audit MOHELA’s performance under its federal servicing contract.  
  • In April 2024, the U.S. Senate Banking Committee held a hearing examining MOHELA’s ‘truly shocking’ track record of borrower harm.  
  • In July 2024, AFT sued MOHELA for a wide range of unlawful practices, including illegally executing a “call deflection” scheme to deny service to borrowers who need help.
  • In September 2024, over 50 Members of Congress, led by Congressman Jim Clyburn and Senator Elizabeth Warren, called on ED to probe MOHELA’s servicing practices under its federal contract and take action to protect borrowers “including the potential termination of MOHELA’s federal contract…”
  • In October 2024, AFT and SBPC warned federal financial regulators that MOHELA forced its customers to waive their rights to hold the financial firm accountable, potentially violating a range of federal and state laws. 
  • In October 2024, ED reportedly found that MOHELA had committed widespread servicing failures, violating its government contracts. 
  • In February 2025, three U.S. Senators opened a new probe into MOHELA’s scheme to force its customers to waive their rights to hold the financial firm accountable. 

Further Reading

A copy of the lawsuit filed in AFT v. MOHELA is available here: https://protectborrowers.org/mohela-lawsuit/

A fact sheet outlining the specific claims brought by AFT against MOHELA is available here: https://protectborrowers.org/mohela-factsheet/

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About the AFT

The AFT represents 1.8 million pre-K through 12th-grade teachers; paraprofessionals and other school-related personnel; higher education faculty and professional staff; federal, state and local government employees; nurses and healthcare workers; and early childhood educators.

Learn more at aft.org or follow AFT on Twitter @AFTunion.

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 protectborrowers.org or follow SBPC on Twitter @theSBPC.

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