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Media Press Releases MOHELA’s “Cease and Desist” Letter Offers New Evidence of Mismanagement, Abuse by the Scandal-Ridden Student Loan Company

MOHELA’s “Cease and Desist” Letter Offers New Evidence of Mismanagement, Abuse by the Scandal-Ridden Student Loan Company

Advocates to MOHELA: “Truth is on Our Side;” AFT and SBPC Petition Education Department Inspector General to Audit MOHELA’s Performance Under its Federal Contracts

March 29, 2024 | WASHINGTON, D.C. — Yesterday, the Student Borrower Protection Center (SBPC) and AFT petitioned the U.S. Department of Education (ED)’s Office of the Inspector General to audit the Higher Education Loan Authority of the State of Missouri, also known as MOHELA. On March 25, 2024, MOHELA sent SBPC a so-called “cease and desist” letter, alleging that The MOHELA Papers “tone…is false and misleading” and calling for advocates to retract the blockbuster report while threatening legal action.

In its letter, which appears to be an attempt to deflect attention away from a new probe into the company and the student loan servicing industry writ large announced by U.S. Senator Elizabeth Warren (D-MA), MOHELA confesses to a range of improper practices that should warrant immediate oversight by ED’s independent watchdog. MOHELA goes so far as to blame ED for its own failure to adequately respond to borrowers who called seeking assistance (delaying tactics known as “call deflection”), while taking no responsibility for its role in developing those tactics and for maintaining them despite clear indicators that they failed to meet borrowers’ needs.

In response, SBPC and AFT declined to retract The MOHELA Papers and released the following statements:

“This is corporate bullying at its worst,” said AFT President Randi Weingarten. “Instead of solving problems, MOHELA threatens to sue. Instead of cooperating to help borrowers, they want to stifle borrowers and silence their advocates. Teachers, nurses, and millions of other borrowers across the country know from first-hand lived experience that they have suffered because of MOHELA’s acts. The truth is on our side.”

“MOHELA appears to be even worse at damage control than it is at servicing student loans,” said Mike Pierce, executive director of SBPC. “Not only did MOHELA fail to offer credible evidence that we have our facts wrong, the company appears to have confessed in greater detail to many of the very abuses we allege in our report. The Education Department’s Inspector General must pick up where AFT and SBPC left off and immediately audit MOHELA’s servicing practices.”

A Petition for an Inspector General Audit of MOHELA

Throughout its letter to SBPC, MOHELA makes a series of shocking admissions while taking no responsibility for its own failures—offering new evidence that its handling of student loan borrowers’ accounts has caused widespread harm. For example:

  • MOHELA confesses that 875,000 borrowers missed at least one monthly payment after MOHELA failed to send bills to 2.5 million people. According to MOHELA only, “65% of involved borrowers paid on time or owed nothing,” meaning that the remaining 35% of the 2.5 million people who did not receive a bill from MOHELA failed to pay—or 875,000 people in total.
  • MOHELA confesses that it was not adequately staffed to meet the needs of its customers. According to MOHELA, “[d]uring times of high volume, it was not possible to answer every call or respond to every inquiry as soon as MOHELA preferred.”
  • MOHELA confesses that it improperly calculated an unspecified “small percentage” of borrowers’ payment amounts or refunds. In response to allegations of improper handling of borrower bills and payments, MOHELA stated, “there was only a small percentage of actual documented instances involving miscalculation of borrower payment amounts or refunds by MOHELA during [the return to repayment period].”
  • MOHELA confesses that it improperly denied public service workers’ eligible employment. In its letter, MOHELA acknowledged an unspecified number of “rare and isolated cases” where MOHELA denied “credit to workers with eligible employment,” explaining that so-called “missteps” are “quickly corrected when identified.”

In light of MOHELA’s repeated confessions of improper practices, AFT and SBPC have provided ED’s Office of the Inspector General with a copy of the company’s so-called “cease and desist” letter and petitioned Inspector General Sandra Bruce to open an audit into MOHELA’s performance under its federal contracts. 

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:

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

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. 

Last week, Senator Elizabeth Warren announced that the Senate Banking Committee’s Economic Policy Subcommittee would invite MOHELA CEO Scott Giles to appear before to answer lawmakers’ questions about the company’s practices, including AFT and SBPC’s allegations.


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