A federal lawsuit filed Monday accuses a quasi-governmental organization based in Missouri of illegally overcharging and actively misleading student loan borrowers.
The American Federation of Teachers filed the lawsuit in the U.S. District Court in Washington D.C. against the Missouri Higher Education Loan Authority, better known as MOHELA. The lawsuit claims the student loan servicer illegally deducted payments from borrowers’ bank accounts without consent, misinformed borrowers about paperwork deadlines failed to timely process applications for loan relief, and a litany of other allegedly unlawful activity.
Similar accusations have been made against MOHELA in lawsuits filed in Missouri, as well as in a report released in February by the teacher’s union.
“MOHELA was hired by the federal government to help borrowers pay down debt, but instead it hung them out to dry to line its own pockets,” AFT President Randi Weingarten said in a press release announcing the lawsuit. “Rather than fulfill its responsibilities, MOHELA has abdicated and deflected them — and it’s well past time it’s held to account.”
A spokesperson for the Chesterfield-based company said providing support to student loan borrowers is “the utmost priority to MOHELA, and any claims to the contrary are false. MOHELA will vigorously defend the allegations in the complaint.”
In May, a group of advocates and progressive Democratic lawmakers called on the U.S. Department of Education to end its contract with MOHELA, accusing it of being a predatory loan service and failing student borrowers.
Monday’s lawsuit claims that “individually, any one of MOHELA’s failings would be sufficient to cause financial, mental, and emotional distress.”
“Collectively, they result in a Kafkaesque experience and make it practically impossible for borrowers to correct account errors, make important decisions to protect their economic well-being, or even confirm basic information about their student loans.”
(Photo by Annelise Hanshaw/Missouri Independent)
