A major student-loan company is in the spotlight again for delivering inaccurate information to borrowers.
A group of Democratic lawmakers, including Sens. Elizabeth Warren, Jeff Merkley, and Ed Markey, is seeking information from student-loan servicer MOHELA after it sent borrowers erroneous past-due notices, telling them they were approaching default when they were not.
The lawmakers requested that MOHELA clarify the extent of the error, including how many borrowers received past-due notices, how the glitch occurred, and how long it took the servicer to notify borrowers of the error.
An Education Department spokesperson previously confirmed to Business Insider that the department was aware of an issue affecting “a small number of borrowers at one servicer,” and that affected borrowers would be notified by email of the error.
However, some borrowers said they had not received correction emails and experienced credit score drops following the error. The lawmakers wrote that the error “has not only been highly distressing for borrowers but could have led to direct financial harm.”
“If a borrower does not realize that their false delinquency notice was issued in error and believes that they are on the verge of default, they might make the payment MOHELA has claimed they are responsible for, unnecessarily spending hundreds or even thousands of dollars,” they wrote.
MOHELA has previously been investigated by both lawmakers and the Biden administration for failing to fulfill its contractual obligations. In 2023, the Education Department withheld $7.2 million in pay from the servicer for failing to send on-time billing statements to 2.5 million borrowers, leading to over 800,000 of them being marked as delinquent on their loans.
Daniela Perez, a MOHELA borrower, received the mistaken past-due notices and said she was “a pack of nerves” because she suspected it was a glitch, but didn’t know if she would be required to make the $10,635 payment her account said she owed.
Borrowers have reported a range of of other errors, including inaccurate billing statements, after President Donald Trump’s student-loan repayment overhaul took effect on July 1. While the Education Department has said it continues to monitor servicers, a March report from the Government Accountability Office said the department stopped assessing servicers on billing accuracy.
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