Democratic senators claim that student-loan borrowers eligible for debt cancellation may have to resume repayment due to their servicer’s inadequate customer service.
Democratic senators claim that student-loan borrowers eligible for debt cancellation may have to resume repayment due to their servicer's inadequate customer service.
Democratic Lawmakers Call for Action on Student Loan Company’s Handling of Debt Relief
A group of Democratic lawmakers has expressed concern that student loan borrowers may soon be forced to start repaying their loans, even if they qualify for debt relief. Led by New Jersey Senator Bob Menendez, along with Senator Elizabeth Warren and four others, the lawmakers have sent a letter to Education Secretary Miguel Cardona, calling attention to the treatment of borrowers enrolled in the Public Service Loan Forgiveness (PSLF) program. This program is designed to forgive student loans for government and nonprofit workers after ten years of qualifying payments, with the loans being managed by student loan company MOHELA.
In the letter, the lawmakers highlight several concerns raised by borrowers serviced by MOHELA. These include long wait times to contact customer service, issues with receiving credit for qualifying payments made towards PSLF, and delays in obtaining refunds for borrowers who have already received forgiveness through the program. With the resumption of student loan payments looming on October 1, the lawmakers argue that these issues are likely to worsen for borrowers.
The lawmakers emphasize that borrowers who are eligible for debt cancellation under the PSLF program should not be forced back into repayment due to MOHELA’s processing delays. They assert that such delays cause financial hardships for many borrowers and undermine the assurance given by the administration that the program would be fixed. They further point out that some borrowers may not even be aware that they have the option to request forbearance.
Joining Senator Menendez and Senator Warren in signing the letter are Senators Angus King, Alex Padilla, Ed Markey, and Cory Booker. The lawmakers have asked for a response from Secretary Cardona before payments resume on October 1. They specifically request information on the tools available to the Education Department to hold MOHELA accountable for processing delays, as well as current data on call hold times and abandoned call rates for borrowers who have reached out to the company.
This is not the first time MOHELA has faced scrutiny for its management of federal borrowers’ balances. Prior to the end of the student loan payment pause on September 1, Democratic Representatives Katie Porter and Joe Courtney also sent a letter expressing concerns about PSLF processing delays that have left borrowers in repayment limbo. Some borrowers have previously shared their struggles in obtaining status updates on their PSLF applications, describing long wait times and the inability to get answers from the company.
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While MOHELA is not the only loan servicer facing customer service concerns, borrowers in the PSLF program rely on it to properly administer debt relief once they qualify and process their paperwork in a timely manner. Scott Buchanan, executive director of the Student Loan Servicing Alliance, has attributed the delays to a lack of resources resulting from limited congressional funding.
It remains to be seen how the Education Department will respond to the lawmakers’ concerns. As October 1 draws closer, borrowers anxiously await clarity and action to ensure that they are not unfairly burdened with loan repayments despite qualifying for debt relief. Hopefully, this call for action will prompt necessary improvements in MOHELA’s handling of the PSLF program, thereby alleviating the financial strain faced by many borrowers.
