Press Release

For Immediate Release
April 10, 2024
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MOHELA Statement Following Congressional Hearing

St. Louis, MO - April 10, 2024 - MOHELA, a governmental non-profit organization dedicated to helping the student loan borrowers it serves on behalf of the U.S. Department of Education's Office of Federal Student Aid (FSA), issued a statement following today's Banking, Housing, and Urban Affairs' Subcommittee on Economic Policy congressional hearing on federal student loan servicing.

While MOHELA's Executive Director could not attend a hearing on April 10, the organization held an initial briefing with Subcommittee staff yesterday (April 9, 2024) ahead of the hearing, which served as the first of what MOHELA hopes will be a series of briefings intended to offer the Subcommittee members answers to their questions.

MOHELA is a non-profit government contractor that acts in the best interest of the borrowers we serve. The organization was selected as a federal contractor because of its 40 years of experience and successful track record in helping student loan borrowers navigate repayment of their federal loans. MOHELA remains focused on its primary mission of serving student borrowers throughout the return to repayment on-ramp period and continues to work diligently as the interim Public Service Loan Forgiveness (PSLF) servicer to process loan forgiveness for borrowers on behalf of the federal government.

Here are the facts in response to several false and misleading claims that continue to be promoted

MOHELA followed FSA guidelines on borrower phone calls: As a federal contractor, MOHELA is required to adhere to FSA guidelines and requirements. Federal contractors were directed by FSA to implement "call deflection strategies" and encourage borrowers to use self-service options whenever possible to manage the anticipated high demand.

  • On July 3, 2023, FSA provided its contractors with their ‘Return to Repayment Playbook' which outlined guidelines for all contractors to adhere to as they dealt with the millions of borrowers returning to repayment.

FSA reduced servicer funding ahead of Return to Repayment: Last year, MOHELA helped six million in-repayment federal student loan borrowers (of the total eight million borrowers that it serves) enter repayment and facilitated 3.1 million customer service calls during the massive and unprecedented return to repayment event.

Despite anticipated high demand during this event, FSA reduced funding and the hours of operations for its contractors.

MOHELA does not profit from student loan payments: Under its contract with FSA, MOHELA is paid a minimal fee to service federal loans on behalf of the federal government. Any payments made by student loan borrowers on the principal or interest of their loans is paid to the U.S. Department of Education, as the owner of the loan.

Public Service Loan Forgiveness (PSLF) servicing

Beginning July 2022, only 20 months ago, MOHELA began its work as the interim PSLF servicer on behalf of the federal government. During the history of the program, approximately 857,000 borrowers have received PSLF forgiveness. Of those who received PSLF forgiveness under the program, MOHELA processed nearly $50 billion in PSLF forgiveness for nearly 700,000 borrowers (80% of the total number of borrowers who have received forgiveness under the program) at the direction of FSA. In contrast, directly prior to MOHELA becoming the PSLF servicer, only about 165,000 borrowers had received $10.5 billion in loan forgiveness during the previous five-year period from 2017 through June 2022. 

It's important to note that MOHELA does not have authority to process loan forgiveness for eligible borrowers until authorization is provided by FSA; the final decision to discharge loans is made by FSA as the owner of the loan, not MOHELA. It can take several months for borrowers to receive the final authorization for forgiveness from FSA.

MOHELA's contract as the interim PSLF servicer for the federal government concludes on May 1, 2024. MOHELA has been operating in good faith as the interim PSLF servicer while FSA transitioned to its new loan servicing environment through, which was announced by the U.S. Department of Education in May 2022.

Again, MOHELA has processed nearly $50 billion in PSLF forgiveness for nearly 700,000 borrowers at the direction of FSA. This is the highest number of forgiveness processed by an FSA contractor in the history of the PSLF program.

MOHELA continues to faithfully fulfill its obligations pursuant to its federal loan servicing contracts.