Federal Loan Servicing Abuse
Historic servicing failures and abuses have raised costs and kept borrowers from critical relief.
The federal government pays servicers like MOHELA hundreds of millions of dollars each year to manage the federal loan portfolio and help borrowers navigate the student loan system. But policy failures by the U.S. Department of Education combined with decades of abusive practices by companies such as Navient and PHEAA have long denied borrowers access to critical relief programs, such as Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF).
The government’s practice of “whitelabeling” (representing to borrowers that private companies are the government) allows certain servicers to operate in the shadows and further shields these companies from liability. Ultimately, borrowers suffer the consequences of bad servicing—they pay more on their loans, are trapped in debt for longer, and millions end up in default, which has devastating effects on borrowers, their families, and the larger economy.
What We’re Doing
Protect Borrowers conducts groundbreaking research and investigations to expose corrupt and abusive servicer misconduct and is shining a light on the ways that these abusive practices are crushing student loan borrowers’ financial lives and denying them access to their rights under the law.
We demand accountability through litigation and rigorous advocacy to federal, state, and local regulatory and enforcement agencies, putting money back in the pockets of borrowers and forcing companies to stop their abusive practices.
We also work with policymakers at every level of government to rewrite the rules to protect borrowers and develop the tools needed to ensure accountability and relief.
By The Numbers
$1 Billion
In total, student loan servicers are paid more than $1 billion dollars each year.
18,000 consumer complaints
A CFPB analysis of over 18,000 consumer complaints shows that servicer errors with billing, customer service failures, and incorrect repayment information are causing severe financial and personal distress to borrowers.
More than 60%
More than 60 percent of borrowers transferred loan servicers since 2020.
More than 5 MILLION
Our investigations documented more than five million loan servicing errors.