Higher Education Loan Authority of the State of Missouri facts for kids
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| Quasi-governmental | |
| Industry | Student loans |
| Founded | June 15, 1981 |
| Headquarters | Chesterfield, Missouri, U.S. |
| Owner | State government of Missouri |
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Number of employees
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625 (2013) |
The Higher Education Loan Authority of the State of Missouri, also known as the Missouri Higher Education Loan Authority or MOHELA is one of the largest holders and servicers of student loans in the United States. Its headquarters are in St. Louis, Missouri.
Created in 1981 as a quasi-governmental entity, MOHELA participated in the Federal Family Education Loan Program (FFELP) for nearly three decades, where it oversaw loans guaranteed by the federal government. Following the abolition of the FFELP program in 2010, MOHELA began to expand its business, overseeing around 6.7 million student loan borrower accounts as of 2022.
History
Early history (1981-2019)
MOHELA was founded by Missouri lawmakers in 1981 to oversee loans guaranteed by the U.S. federal government through the Federal Family Education Loan Program. Following the program's abolition in 2010, MOHELA began to expand its presence in the student loan servicing industry. In 2011, it was granted a contract with the Department of Education (DOE) to service over 100,000 federal student loans in 2011.
Operations during loan forbearance period (2020-2023)
As part of the U.S. federal government's response to the COVID-19 pandemic, the Federal Student Aid (FSA) office initiated a temporary pause on student loan payments alongside a 0% interest rate. In June 2020, the DOE announced that MOHELA was one of five servicers that would help oversee the federal student loan portfolio in order to bring “enhanced customer support”.
In 2021, it was reported that some FedLoan (Pennsylvania Higher Education Assistance Agency) student servicing loans were transferred to MOHELA. MOHELA became the sole servicer for the Public Service Loan Forgiveness (PSLF) program in July 2022, following the decision of FedLoan to break its ties with the Department of Education.
By August 2022, MOHELA was responsible for overseeing some 6.7 million student borrower accounts on the DOE's behalf, along with around 330,000 private loan borrowers. This increased to over 7.5 million borrowers by August 2023. As of December 2022, MOHELA has a 1.01 star rating from the Better Business Bureau.
Operations following resumption of loan payments (2023-present)
Following the resumption of student loan payments in October 2023, MOHELA was fined by the DOE for failing to send billing statements to student loan borrowers on time. In 2023, The Guardian reported that MOHELA "stands out among servicers for late bills and incorrect auto-debits."
In February 2023, the American Federation of Teachers and Student Borrower Protection Center released a report showing that 4 in 10 borrowers were affected by "servicing failures," including internal guidance described as a “call deflection scheme.” In July 2024, AFT filed a federal lawsuit in which the user experience of MOHELA's operations were described as "Kafkaesque."
Legal issues
October 2023 $7.2 million Fine by U.S. Department of Education
In October 2023, the Department of Education announced it would penalize MOHELA for failing to send billing statements on time to 2.5 million student borrowers, whose payments resumed that month following a forbearance period that begun in 2020. As a result, the DOE announced it would withhold over $7.2 million from MOHELA’s October payment, and ordered MOHELA to give all impacted student borrowers forbearance.
January 2024 Public Service Loan Forgiveness (PSLF) Class Action Lawsuit
In December 2023, a pair of student borrowers filed suit against MOHELA for its alleged mismanagement of the Public Service Loan Forgiveness (PSLF) program. The plaintiffs claimed that after becoming candidates for the program in August 2022, MOHELA did not respond to their requests, leading them to submit the request a year later. According to the plaintiffs, MOHELA nonetheless requested that the borrowers resume payments to their PSLF-eligible loans.
On January 2023, Sauder Schelkopf filed a class action lawsuit against the Department of Education and MOHELA. Plaintiffs Spencer Morgan, Francis Novak and Rowena Koenig claim that, despite servicing the PSLF program for more than a year before student loan payments resumed on Sept. 1, 2023, MOHELA has failed to process and render decisions on pending PSLF applications in a timely manner.
2024 American Federation of Teachers (AFT) lawsuit
In July 2024, the American Federation of Teachers (AFT) filed a lawsuit against MOHELA. The lawsuit accusing the company of mismanaging eight million student borrowers' accounts and preventing borrowers' from making their payments and receiving debt relief. Following the suit, Senate Majority Leader Chuck Schumer and Senators Bernie Sanders and Elizabeth Warren called for the DOE to scrutinize MOHELA's practices.
Types of student loans owned or serviced by MOHELA
MOHELA services student loans, including:
- Federal subsidized and unsubsidized Stafford loans
- Subsidized and unsubsidized Federal Direct loans
- Federal Perkins loans, a need-based student loan
- PLUS loans, which are part of the Federal Direct Student Loan Program
- Federal GradPLUS loans
- Federal student loan consolidation
Number of student loans serviced
In a letter to members of the U.S. Senate, MOHELA stated that it serviced 2,464,028 student loan borrowers on February 1, 2020. This number increased to 7,773,939 by August 3, 2023.
