No act of public service goes unpunished. The Missouri Higher Education Loan Authority (Mohela) mounted a successful legal challenge to the Biden Administration’s $400 billion student loan forgiveness. Now the Administration is dunning the student loan servicer for problems the government caused.
Education Secretary Miguel Cardona and Federal Student Aid Chief Operating Officer Richard Cordray said Monday they are withholding $7.2 million in payment to Mohela for allegedly failing to send timely billing statements to 2.5 million borrowers before their loan payments restarted in October after the three-and-a-half year pandemic pause.
Mohela assists nearly 7.8 million student loan borrowers, about 5.3 million of whom it added during the pandemic as several loan servicers withdrew from the program because of administrative headaches and costs. Mohela and other servicers have been stuck sorting out the confusion for some 40 million borrowers as repayments start.