Warren, Clyburn, Lawmakers to Newly Confirmed Education Secretary: Penalize MOHELA for Poor Performance

Data released by Education Department shows loan servicer is worst-performing on a range of metrics
After questioning from Warren, McMahon recently committed to “improving service delivery” for students, families, taxpayers
Text of Letter (PDF)
Washington, D.C. –U.S. Senator Elizabeth Warren (D-Mass.) and Representative Jim Clyburn (D-S.C.), along with Minority Leader Chuck Schumer (D-N.Y.) and 25 lawmakers wrote to Linda McMahon, the recently confirmed Secretary of the Department of Education (ED), regarding troubling new data revealing that the Higher Education Loan Authority of the State of Missouri (MOHELA) is performing worse than all other federal servicers on key customer service metrics. After her confirmation hearing, Secretary McMahon underscored her commitment to “review the performance of [ED’s] current contractors with the goal of improving service delivery on behalf of students, their families, and taxpayers.”
In September 2024, following lawsuits brought by the American Federation of Teachers (AFT) and Project on Predatory Student Lending (PPSL) alleging that MOHELA had mishandled its student loan servicing responsibilities, Senator Warren led thecall for ED to investigateMOHELA’s performance and potentially terminate MOHELA’s contract. In response, EDreleased new datashowing that MOHELA was the worst-performing student loan servicer according to all metrics measured.
MOHELA received the lowest score among federal student loan servicers for:
“[This] abysmal performance compared to other servicers adds to a mountain of evidence that the servicer is wildly mismanaging its responsibilities,”wrote the lawmakers.
Over the last two years alone, MOHELA has failed borrowers by:
“To date, MOHELA has received $1.1 billion in taxpayer funds to service federal student loans. But ED’s newly released data proves MOHELA is once again failing to meet its contractual obligations as a federal student loan servicer,”wrote the lawmakers.
In 2023, EDupdated its accountability framework, outlining how the Department will hold servicers accountable for poor performance.
“[W]e urge you to…send MOHELA a clear message that it must do its job properly if it wants to continue receiving taxpayer dollars. If MOHELA does not clean up its act, ED should also consider terminating its contract with the servicer, as over fifty lawmakers called for last year,”concluded the lawmakers.
The letter was also signed by Senators Richard Blumenthal (D-Conn.), Kirsten Gillibrand (D-N.Y.), Mazie Hirono (D-Hawaii), Jeff Merkley (D-Ore.), Ron Wyden (D-Ore.), and Chris Van Hollen (D-Md.), as well as Representatives Becca Balint (D-Vt.), Brendan Boyle (D-Pa.), Danny Davis (D-Ill.), Eleanor Holmes Norton (D-D.C.), Pramila Jayapal (D-Wash.), Hank Johnson (D-Ga.), Ro Khanna (D-Calif.), Alexandria Ocasio Cortez (D-N.Y.), Ilhan Omar (D-Minn.), Ayanna Pressley (D-Mass.), Delia Ramirez (D-Ill.), Adam Smith (D-Wash.), Melanie Stansbury (D-N.M.), Eric Swalwell (D-Calif.), Bennie Thomspon (D-Miss.), Rashida Tlaib (D-Mich.), Maxine Waters (D-Calif.), Nikema Williams (D-Ga.), and Frederica Wilson (D-Fla.).
Senator Warren has led the fight to reform our higher education system, cancel student loan debt, and hold student loan servicers accountable:
###