Warren, Blumenthal, Duckworth Ramp Up Investigation Into MOHELA’s Predatory Website Terms of Use

Lawmakers hit loan servicer for efforts to infringe on borrowers’ legal rights
With Education Department’s future uncertain, MOHELA’s behavior raises concerns about ability to keep student loan servicers in check
“MOHELA has imposed an exploitative set of Terms upon all borrowers that set up an account on its website…[Y]our response indicates a worrying disregard for borrowers’ rights.”
Text of Letter (PDF)|MOHELA Response to November 2024 Letter (PDF)
Washington, D.C. –U.S. Senators Elizabeth Warren (D-Mass.), Tammy Duckworth (D-Ill.), and Richard Blumenthal (D-Conn.) wrote to the student loan servicer Missouri Higher Education Loan Authority (MOHELA) with continued concerns over its website’s Terms of Use (TOU), which appear to be written with the intent to relieve MOHELA of liability for severe misconduct and may infringe upon student loan borrowers’ legal rights.
MOHELA has repeatedly shirked its basic responsibilities as a federal student loan servicer and has beenrepeatedly penalizedby ED for doing so. In November 2024, the Senatorswrote to MOHELAto raise their initial concerns about the company’s tactics. The loan servicer’s response evaded questions, failed to provide a reasonable justification for the predatory provisions in its TOU, and made multiple false assertions.
In its response, MOHELA:
“MOHELA’s explanations fail to provide persuasive justifications for these provisions…[and the t]erms are clearly written and designed to absolve MOHELA of wide swaths of damages even in the cases of significant wrongdoing,”wrote the senators.
MOHELA’s terms may also violate federal consumer protection law. TheConsumer Financial Protection Act(CFPA) prohibits abusive contracts, including those that take “unreasonable advantage” of “unequal bargaining power.” That could apply to MOHELA’s TOU, since borrowers assigned to MOHELA have no choice but to sign the TOU and cannot choose a different loan servicer. MOHELA did not address the senators’ concerns in this area.
The lawmakers urged the loan servicer to remove all predatory provisions from its TOU and asked MOHELA to provide clarity on its decision to impose it on borrowers by March 13, 2025.
Senator Warren has led the fight to reform our higher education system, cancel student loan debt, and hold student loan servicers accountable:
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