The Biden administration has taken strong measures against a student-loan servicer that failed to send timely billing statements to 2.5 million borrowers. This lapse in service resulted in over 800,000 borrowers missing their payment deadline.
As of now, there has been no response from MOHELA regarding this matter.
MOHELA: Ensuring Student Loan Payment Accuracy
MOHELA is a reputable servicer that handles student loan payments for approximately 44 million federal borrowers in the United States. It is crucial for servicers to send billing statements at least 21 days prior to the payment due date, providing borrowers with pertinent information such as the exact amount owed and the payment date. However, according to the Department of Education, some borrowers only received their billing notice seven days before the payment date.
Abby Shafroth, co-director of advocacy for the National Consumer Law Center, emphasizes that these servicing failures are not new and contribute to the ongoing student debt crisis. Nevertheless, Shafroth acknowledges the swift action taken by the Education Department to protect borrowers from shouldering the burden of servicers’ mistakes.
Additionally, the Department of Education uncovered errors made by loan servicers resulting in a few borrowers receiving inaccurate payment amounts on their billing statements. Thankfully, no affected borrowers will suffer any financial consequences, as confirmed by the agency.
To rectify the situation, the agency has directed servicers to place all affected borrowers into administrative forbearance until the issue is resolved. Furthermore, any interest that accrues during this period will be adjusted to zero. Importantly, this forbearance period will count towards loan forgiveness through Public Service Loan Forgiveness and Income-Driven Repayment plans.
For borrowers who are unsure about their student loan servicer(s), studentaid.gov offers a helpful solution. By visiting the website and clicking on the “My Aid” tab, borrowers can easily find information about their designated servicer(s).
Ensuring accuracy and transparency in student loan payments is of paramount importance. MOHELA and other servicers must adhere to proper billing practices to support borrowers in their journey towards financial stability and success.