2.5M student loan borrowers hit with billing mistakes, Education Department says
The department said that in some cases MOHELA sent borrowers a bill only seven days before a payment was due.By Michael Stratford
10/30/2023 11:33 AM EDT
Education Department officials disclosed on Monday that one of the agency’s contracted loan servicing companies failed to send timely billing statements to 2.5 million borrowers over the past month, resulting in hundreds of thousands of borrowers missing their payments.
The loan servicing errors by the Missouri Higher Education Loan Authority, known as MOHELA, were so serious, officials said, that the department would withhold $7.2 million of compensation due to the company for October.
The department said that MOHELA, which the Biden administration awarded a new contract in April after extending its contract in 2021, had failed to meet a “basic obligation” as a loan servicer.
Servicers are typically required to send billing statements to borrowers at least 21 days before their payments are due. But the Education Department said that in some cases MOHELA sent borrowers a bill only seven days before a payment was due.
Of the 2.5 million borrowers who were sent late billing notices by MOHELA, approximately 800,000 borrowers subsequently became delinquent on their loans, according to the department.
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https://www.politico.com/news/2023/10/30/student-loan-borrowers-billing-mistake-00124225
