![“Controversy Surrounds MOHELA: Accusations of Mismanagement in Public Service Loan Programs and ‘Call Deflection Scheme'” “Controversy Surrounds MOHELA: Accusations of Mismanagement in Public Service Loan Programs and ‘Call Deflection Scheme'”](https://americannewstimes.com/wp-content/uploads/2024/03/3-11.png)
A major student loan company, the Missouri Higher Education Loan Authority (MOHELA), is under fire as the American Federation of Teachers and the Student Borrower Protection Center accuse it of mismanaging a crucial student loan program for public service workers. The groups allege that MOHELA engaged in a “call deflection scheme” to avoid assisting borrowers in need and released internal documents obtained through public information laws.
MOHELA
In response, MOHELA dismissed the accusations as false and part of a PR campaign, asserting its commitment to assisting millions of student loan borrowers. The conflict intensifies the already strained relationship between student loan companies and Democratic constituencies, as the Biden administration relies on such entities to implement debt relief policies.
The 47-page report details MOHELA’s handling of bill returns this fall, suggesting that the company confused borrowers with misinformation, hindering problem resolution to save costs. Critics argue that MOHELA failed borrowers, particularly those seeking assistance after the pandemic-induced suspension of bill payments.
The report specifically highlights two major allegations. Firstly, it accuses MOHELA of profiting from a backlog in the Public Service Loan Forgiveness (PSLF) program, with nearly one million unprocessed forms. The report claims that some borrowers were incorrectly told they didn’t qualify for the program, and payments were inaccurately counted. Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren criticized MOHELA for its conduct in a joint statement.
Secondly, the report alleges a “call deflection scheme,” where MOHEL diverted borrowers from getting help through customer service representatives. MOHEL contends that this guidance was part of its plan, encouraged by the Education Department to manage the anticipated surge in calls.
The Education Department had previously penalized MOHEL with a $7.2 million fine for failing to send millions of borrowers their bills on time. Congressional Democrats have urged the Consumer Financial Protection Bureau to investigate the allegations in the report. The conflict adds to the ongoing debate over the role of student loan companies and their impact on borrowers.