Senators demand answers on major loan servicer’s ‘egregious’ business practices

The chief executive officer of a prominent federal student loan servicer must “immediately act to remedy the harm that has resulted from their egregiously unacceptable business practices,” stated a letter co-signed by eight U.S. senators and published Friday.

The loan servicer in question is Higher Education Loan Authority of the State of Missouri, most commonly referred to as MOHELA, and its CEO is Scott Giles.

MOHELA is the only servicer for borrowers in the Public Service Loan Forgiveness program, known as PSLF; as of last year, it oversaw student loan accounts for nearly 8 million borrowers.

In the letter, the senators demand a response by April 1 to questions regarding the business’s alleged scheme to deflect borrowers’ calls, which they say “intentionally directed borrowers away from customer service representatives even though many loan services, such as resolving disputes and issuing refunds, require a customer service representative.”

The list of nine questions also requests information about the backlog of 800,000 unprocessed loan forgiveness forms, steps they’re taking to address alleged miscalculations of payment amounts, how many people’s forgiveness applications were denied and the reasons for denials, and more.

The letter is in response to a recent report from the Student Borrower Protection Center and the American Federation of Teachers.

The senators who co-signed are Edward J. Markey (D-Mass.), Chuck Schumer (D-N.Y.), Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), Kirsten Gillibrand (D-N.Y.), Richard Blumenthal (D-Conn.), and Peter Welch (D-Vt.).