Massachusetts Senator Elizabeth Warren is demanding answers from the CEO of a major student-loan company, urging him to testify before Congress next month.
Invitation to Testify
Warren sent a letter to Scott Giles, the CEO of MOHELA, a federal student-loan servicer, inviting him to testify before the Senate banking committee on April 10. The hearing, titled “MOHELA’s Performance as a Student Loan Servicer,” aims to evaluate MOHELA’s conduct since the resumption of loan repayments and its management of the Public Service Loan Forgiveness (PSLF) Program.
Allegations Against MOHELA
MOHELA faced repercussions from the Education Department for breaching its contractual obligations. In October, the department withheld over $7 million in payments from MOHELA due to its failure to deliver billing statements promptly to borrowers. Additionally, two borrowers filed a lawsuit against MOHELA in December, accusing the company of delaying their PSLF applications and wrongly requiring payments.
Warren’s Criticism
In her letter to MOHELA’s CEO, Warren criticized the company for exacerbating borrowers’ challenges by mishandling the repayment process post-COVID-19 pause and obstructing public servants’ access to PSLF relief. She emphasized the importance of Giles’ testimony to provide clarity on MOHELA’s role as a student loan servicer during a crucial period for the federal loan program.
Response from MOHELA
MOHELA has not issued an immediate response to Warren’s request for comment.
Previous Scrutiny and Calls for Investigation
Warren, alongside other Democratic lawmakers, has previously raised concerns about MOHELA’s management of student loan accounts. Alongside Senate Majority Leader Chuck Schumer and Senator Bernie Sanders, Warren urged the Consumer Financial Protection Bureau and state attorneys general to investigate MOHELA thoroughly.
Ongoing Challenges for Borrowers
Despite governmental interventions, many borrowers remain confused about their loan status, particularly concerning PSLF. Some borrowers who received loan forgiveness through PSLF were later informed by MOHELA that it was an error, forcing them to resume payments abruptly and causing distress.
The situation underscores the need for transparency and accountability in the student loan servicing industry, with Warren’s call for a congressional hearing signaling increased scrutiny and potential reforms to protect borrowers’ rights and interests.
Leave a Reply