{{Short description|U.S. student loan servicer}} {{Use American English|date = March 2019}} {{Use mdy dates|date = March 2019}} {{More citations needed|date=July 2021}} {{Infobox company | name = Higher Education Loan Authority of the State of Missouri | type = Quasi-governmental | logo = MOHELA logo.png | logo_caption = | founded = {{start date |1981|6|15}} | owner = State government of Missouri | hq_location = Chesterfield, Missouri, U.S. | num_employees = 625 | num_employees_year = 2013 | industry = Student loans <!--43-1261525 (EIN)--> | website = {{URL |https://www.mohela.com/}} | footnotes = }} The '''Higher Education Loan Authority of the State of Missouri''', also known as the '''Missouri Higher Education Loan Authority''' or '''MOHELA''' is one of the largest holders and servicers of student loans in the United States. Its headquarters are in Chesterfied, Missouri, a suburb of St. Louis, Missouri.

Created in 1981 as a quasi-governmental entity, MOHELA participated in the Federal Family Education Loan Program (FFELP) for nearly three decades, where it oversaw loans guaranteed by the federal government. Following the abolition of the FFELP program in 2010, MOHELA began to expand its business, overseeing around 6.7 million student loan borrower accounts as of 2022.<ref name=":0">{{Cite web |last=Stratford |first=Michael |date=2022-12-17 |title=The student loan company being used to attack Biden's debt relief plan |url=https://www.politico.com/news/2022/12/17/student-loan-bidens-debt-relief-plan-00074197 |access-date=2024-01-09 |website=POLITICO |language=en}}</ref>

== History ==

=== Early history (1981–2019) === MOHELA was founded by the Missouri General Assembly in 1981 to oversee loans guaranteed by the U.S. federal government through the Federal Family Education Loan Program. Following the program's abolition in 2010, MOHELA began to expand its presence in the student loan servicing industry. In 2011, it was granted a contract with the Department of Education (ED) to service over 100,000 federal student loans in 2011.

=== Operations during loan forbearance period (2020–2023) === As part of the U.S. federal government's response to the COVID-19 pandemic, the Federal Student Aid (FSA) office initiated a temporary pause on student loan payments alongside a 0% interest rate.<ref>{{Cite web |last=Davidson |first=Paul |date=2023-12-26 |title=Student loan payments restarted after a COVID pause. Why the economy is barely feeling it. |url=https://www.usatoday.com/story/money/2023/12/26/student-loan-payments-economy/71980484007/ |access-date=2024-01-11 |website=USA TODAY |language=en-US}}</ref> In June 2020, ED announced that MOHELA was one of five servicers that would help oversee the federal student loan portfolio in order to bring “enhanced customer support”.<ref>{{Cite web |last=Minsky |first=Adam S. |title=Major Student Loan Servicing Change Will Impact 1 Million Borrowers |url=https://www.forbes.com/sites/adamminsky/2020/10/22/major-student-loan-servicing-change-will-impact-1-million-borrowers/ |access-date=2024-01-11 |website=Forbes |language=en}}</ref><ref>{{Cite web |last=Friedman |first=Zack |title=Nelnet And Great Lakes Will No Longer Service Your Federal Student Loans |url=https://www.forbes.com/sites/zackfriedman/2020/06/30/student-loans-nelnet-great-lakes/ |access-date=2024-01-11 |website=Forbes |language=en}}</ref>

In 2021, it was reported that some FedLoan (Pennsylvania Higher Education Assistance Agency) student servicing loans were transferred to MOHELA.<ref>{{Cite web |last=Friedman |first=Zack |title=Why 16 Million Student Loan Borrowers Will Get A New Student Loan Servicer |url=https://www.forbes.com/sites/zackfriedman/2021/10/03/16-million-student-loan-borrowers-will-get-a-new-student-loan-servicer-in-2022/ |access-date=2024-01-11 |website=Forbes |language=en}}</ref> MOHELA became the sole servicer for the Public Service Loan Forgiveness (PSLF) program in July 2022, following the decision of FedLoan to break its ties with the Department of Education.<ref name=":1">{{Cite web |last=Douglas-Gabriel |first=Danielle |date=2023-12-12 |title=Student loan servicer MOHELA sued, accused of mismanaging forgiveness |url=https://www.washingtonpost.com/education/2023/12/12/mohela-lawsuit-public-service-loan-forgiveness/ |access-date=2023-12-12 |website=Washington Post}}</ref>

By August 2022, MOHELA was responsible for overseeing some 6.7 million student borrower accounts on ED's behalf, along with around 330,000 private loan borrowers.<ref name=":0" /> This increased to over 7.5 million borrowers by August 2023.<ref name=":2">{{Cite news |last=Adams |first=Rosalind |date=2023-12-07 |title=Borrowers face billing errors in a rocky return to US student loan payments |url=https://www.theguardian.com/money/2023/dec/07/student-loan-payments-mohela-billing-errors |access-date=2024-01-11 |work=The Guardian |language=en-GB |issn=0261-3077}}</ref> As of December 2022, MOHELA has a 1.01 star rating from the Better Business Bureau.<ref>{{cite web |title=MOHELA |url=https://www.bbb.org/us/mo/chesterfield/profile/loans/mohela-0734-110149672 |access-date=6 December 2022 |website=Better Business Bureau}}</ref>

=== Operations following resumption of loan payments (2023–present) === Following the resumption of student loan payments in October 2023, MOHELA was fined by ED for failing to send billing statements to student loan borrowers on time.<ref name=":3" /> In 2023, ''The Guardian'' reported that MOHELA "stands out among servicers for late bills and incorrect auto-debits."<ref name=":2" />

In February 2023, the American Federation of Teachers and Student Borrower Protection Center released a report showing that 4 in 10 borrowers were affected by "servicing failures," including internal guidance described as a “call deflection scheme.”<ref>{{Cite web |last=Hanshaw |first=Annelise |date=2024-02-29 |title=MOHELA faces accusations it mismanaged federal student loan forgiveness program • Missouri Independent |url=https://missouriindependent.com/2024/02/29/mohela-faces-accusations-it-mismanaged-federal-student-loan-forgiveness-program/ |access-date=2024-03-01 |website=Missouri Independent |language=en-US}}</ref><ref>{{Cite web |last=Schermele |first=Zachary |date=February 29, 2024 |title=Major student loan company MOHELA accused of ‘deflecting' calls, mismanagement |url=https://www.usatoday.com/story/news/education/2024/02/29/student-loans-mohela-debt-relief/72760667007/ |access-date=2024-03-01 |website=USA TODAY |language=en-US}}</ref> In July 2024, AFT filed a federal lawsuit in which the user experience of MOHELA's operations were described as "Kafkaesque."<ref>{{Cite web |last=Hancock |first=Jason |date=July 22, 2024 |title=Teachers union files federal lawsuit alleging MOHELA mismanaged millions of student loans |url=https://missouriindependent.com/briefs/teachers-union-files-federal-lawsuit-alleging-mohela-mismanaged-millions-of-student-loans/ |access-date=2024-07-23 |website=Missouri Independent |language=en-US}}</ref>

== Controversies == MOHELA has been subject to criticism from student borrowers regarding the MOHELA's handling of their loans that were transferred under its purview. ''The Washington Post'' noted that student borrower complaints against MOHELA spiked from 2021 to 2022: The Consumer Financial Protection Bureau (CFPB) went from receiving seven official complaints regarding MOHELA in the last quarter of 2021, to receiving over 500 complaints in the last three months of 2022 over MOHELA's loan servicing practices.<ref name=":4">{{Cite web |last=Douglas-Gabriel |first=Danielle |date=2022-01-28 |title=Public servants complain about MOHELA’s management of student loan forgiveness |url=https://www.washingtonpost.com/education/2022/12/28/mohela-pslf-applicant-complaints-payments/ |access-date=2024-01-10 |website=Washington Post}}</ref>

Student borrowers' complaints against MOHELA include:<ref>{{Cite web |last=Deckelmann |first=Selena |date=February 23, 2012 |title=Student Loan Sharks: Mohela is shady (but the CSR I talked to was really nice) |url=http://www.chesnok.com/daily/2012/02/23/mohela-is-shady/ |access-date=July 9, 2021 |website=Chesnok}}</ref><ref>{{Cite web |last=Rasberry |first=Shannon |date=May 3, 2012 |title=Federal Student Loan Servicer Transition Leaves Borrowers Lost in the Shuffle |url=http://studentloansblog.nextstudent.com/2012/05/03/federal-student-loan-servicer-transition-leaves-borrowers-lost-in-the-shuffle/ |url-status=dead |archive-url=https://web.archive.org/web/20121213030858/http://studentloansblog.nextstudent.com/2012/05/03/federal-student-loan-servicer-transition-leaves-borrowers-lost-in-the-shuffle/ |archive-date=December 13, 2012 |access-date=November 29, 2012 |website=Student Loans Blog}}</ref>

* Charges for late payments due to delayed processing of those made to the Department of Education (DOE) before the transfer * Failure to process borrowers' forms * Suspension of auto-payment programs * Changes to borrower's selected repayment plan and unwanted forbearances and deferments * Increased payment amounts * Lengthened estimated repayment-dates * Applied or capitalized interest

=== Criticism surrounding administration of Public Student Loan Forgiveness program === {{Main|Public Service Loan Forgiveness}} In December 2022, ''The Washington Post'' reported that "thousands of borrowers have lodged complaints with the Education Department" in the previous three months over MOHELA's administration of the Public Service Loan Forgiveness (PSLF) program. Under the program, eligible public servants, including social workers and teachers, are able to have their debt cancelled after 10 years of service and 120 loan payments made on-time.<ref name=":4" /> Student loan borrowers eligible for PSLF relief have filed suit against MOHELA, accusing the servicer of delaying the cancellation of their debt and forcing them to make additional payments.<ref>{{Cite web |last=Sheffey |first=Ayelet |date=2023-12-13 |title=2 student-loan borrowers sued a major servicer over accusations it delayed their debt cancellation and 'forced' them to make extra payments |url=https://www.businessinsider.com/student-loan-borrowers-sue-mohela-delay-public-service-debt-forgiveness-2023-12 |access-date=2024-01-11 |website=Business Insider |language=en-US}}</ref>

=== Role in student loan forgiveness lawsuit === Whether the state of Missouri could sue on behalf of MOHELA, which itself declined to get involved in the lawsuit, to block U.S. President Biden's student loan forgiveness executive order was one of the main issues in the Supreme Court case on the matter.<ref>{{cite news |last1=Sheffey |first1=Ayelet |title=A student-loan company that took over public servants' accounts is involved in one of the first major lawsuits against Biden's debt cancellation |url=https://www.businessinsider.com/student-loan-company-mohela-involved-lawsuit-against-biden-debt-cancellation-2022-10?op=1 |access-date=6 December 2022 |work=Business Insider}}</ref><ref>{{Cite web |last=Hurley |first=Lawrence |date=2023-02-27 |title=Missouri's student loan corporation could help doom Biden's debt relief plan |url=https://www.nbcnews.com/politics/supreme-court/missouris-student-loan-corporation-help-doom-bidens-debt-relief-plan-rcna72000 |access-date=2023-05-05 |website=NBC News |language=en}}</ref>

MOHELA was accused of being involved in six state attorneys' general lawsuit against the loan forgiveness program, which MOHELA executives denied.<ref name=":0"/> The Supreme Court ultimately decided that it could sue on behalf of MOHELA in ''Biden v. Nebraska'', citing ''Arkansas'' v. ''Texas'' (1953) and ''Lebron v. National Railroad Passenger Corp''. (1995)<ref>{{cite court |litigants=Biden v. Nebraska |court=Supreme Court |date=2023 |url=https://www.supremecourt.gov/opinions/22pdf/22-506_nmip.pdf |}}</ref>

== Legal issues ==

=== October 2023 $7.2 million Fine by U.S. Department of Education === In October 2023, the Department of Education announced it would penalize MOHELA for failing to send billing statements on time to 2.5 million student borrowers, whose payments resumed that month following a forbearance period that begun in 2020. As a result, ED announced it would withhold over $7.2 million from MOHELA's October payment, and ordered MOHELA to give all impacted student borrowers forbearance.<ref name=":3">{{Cite web |last=Lobosco |first=Katherine |date=2023-10-30 |title=Student loan servicer MOHELA penalized for sending late bills {{!}} CNN Politics |url=https://www.cnn.com/2023/10/30/politics/student-loan-mohela-late-bills/index.html |access-date=2024-01-09 |website=CNN |language=en}}</ref><ref>{{Cite web |title=U.S. Department of Education Announces Withholding of Payment to Student Loan Servicer as Part of Accountability Measures for Harmed Borrowers {{!}} U.S. Department of Education |url=https://www.ed.gov/news/press-releases/us-department-education-announces-withholding-payment-student-loan-servicer-part-accountability-measures-harmed-borrowers |access-date=2024-02-15 |website=www.ed.gov}}</ref>

=== January 2024 Public Service Loan Forgiveness (PSLF) Class Action Lawsuit === In December 2023, a pair of student borrowers filed suit against MOHELA for its alleged mismanagement of the Public Service Loan Forgiveness (PSLF) program. The plaintiffs claimed that after becoming candidates for the program in August 2022, MOHELA did not respond to their requests, leading them to submit the request a year later. According to the plaintiffs, MOHELA nonetheless requested that the borrowers resume payments to their PSLF-eligible loans.<ref name=":1" />

In January 2023, [https://www.sauderschelkopf.com/investigations/mohela-public-service-loan-forgiveness-pslf-class-action-lawsuit-investigation/ Sauder Schelkopf] filed a [https://www.sauderschelkopf.com/wp-content/uploads/2023/10/Morgan-v.-MOHELA-Complaint-as-filed.pdf class action lawsuit] against the Department of Education and MOHELA. Plaintiffs Spencer Morgan, Francis Novak and Rowena Koenig claim that, despite servicing the PSLF program for more than a year before student loan payments resumed on Sept. 1, 2023, MOHELA has failed to process and render decisions on pending PSLF applications in a timely manner.<ref>{{Cite web |last=Jewett |first=Abraham |date=2024-02-01 |title=MOHELA slow to process Public Service Loan Forgiveness applications, class action alleges |url=https://topclassactions.com/lawsuit-settlements/money/loans/mohela-slow-to-process-public-service-loan-forgiveness-applications-class-action-alleges/ |access-date=2024-02-15 |website=Top Class Actions |language=en}}</ref>

=== 2024 American Federation of Teachers (AFT) lawsuit === In July 2024, the American Federation of Teachers (AFT) filed a lawsuit against MOHELA. The lawsuit accusing the company of mismanaging eight million student borrowers' accounts and preventing borrowers from making their payments and receiving debt relief.<ref>{{Cite web |last=Sheffey |first=Ayelet |date=2024-07-22 |title=A major student-loan company is being sued over claims it mismanaged 8 million borrowers' accounts, blocking them from lower payments and debt relief |url=https://www.businessinsider.com/student-loan-company-mohela-sued-mismanaged-borrowers-debt-relief-payments-2024-7 |access-date=2024-07-25 |website=Business Insider |language=en-US}}</ref> Following the suit, Senate Majority Leader Chuck Schumer and Senators Bernie Sanders and Elizabeth Warren called for ED to scrutinize MOHELA's practices.<ref>{{Cite web |last=Berman |first=Jillian |date=2024-07-24 |title=Student-loan servicer's 'Kafkaesque' customer service kept borrowers in debt, suit claims |url=https://www.morningstar.com/news/marketwatch/2024072497/student-loan-servicers-kafkaesque-customer-service-kept-borrowers-in-debt-suit-claims |access-date=2024-07-26 |website=Morningstar, Inc. |language=en}}</ref>

==Types of student loans owned or serviced by MOHELA== {{See also|funding of higher education in the United States}} MOHELA services student loans, including:

* Federal subsidized and unsubsidized Stafford loans * Subsidized and unsubsidized Federal Direct loans * Federal Perkins loans, a need-based student loan * PLUS loans, which are part of the Federal Direct Student Loan Program * Federal GradPLUS loans * Federal student loan consolidation

=== Number of student loans serviced === In a letter to members of the U.S. Senate, MOHELA stated that it serviced 2,464,028 student loan borrowers on February 1, 2020. This number increased to 7,773,939 by August 3, 2023.<ref>{{Cite web |date=2023-08-01 |title=Response to letter dated July 18, 2023 requesting information about Edfinancial’s plans for return to repayment |url=https://www.warren.senate.gov/imo/media/doc/Servicers%20Responses.pdf |access-date=2024-01-10 |website=United States Senate |quote="As requested, below please find MOHELA’s responses to your questions: 1) How many student loan borrowers does your company currently service? (...) As of 8/3/23, 7,773,939. a) How many student borrowers did your company service in February 1, 2020? (...) 2,464,028."}}</ref>

==References== {{Reflist}}

== External links == * [http://www.mohela.com/ MOHELA] * [https://dhewd.mo.gov/ Missouri Department of Higher Education] * [https://www.usaspending.gov/recipient/b005fff7-e9e3-cf0e-af12-6810483a15a1-P Missouri Higher Education Loan Authority] recipient profile on USAspending.gov ** [https://www.usaspending.gov/award/CONT_IDV_EDFSA11D0012_9100 Contract ED-FSA-11-D-0012] on USAspending.gov

Category:United States federal student loan servicers Category:Education in Missouri Category:1981 establishments in Missouri Category:Education finance in the United States