Well it's about time student loan servicers are being held accountable. MOHELA, or the Missouri Higher Education Loan Authority, failed to send timely billing statements to 2.5 million borrowers. Because of this, more than 800,000 borrowers missed their first student loan payment.
The U.S. Department of Education is withholding $7.2 million in payment to MOHELA for the month of October. Here are some key quotes taken from CNBC and The Washington Post:
Our top priority is to support borrowers as they return to repayment and fix the broken student loan system, and we will not tolerate errors from loan servicers that cause confusion and unwarranted financial instability for borrowers and families.
Rich Cordray, Chief Operating Officer of Federal Student Aid
We will not allow borrowers to suffer the consequences of gross servicing failures.
Miguel Cardona, Education Secretary
Borrowers are penalized for making late payments,” Kantrowitz said. “It is only fair for the loan servicer to be penalized for mailing late statements.
Mark Kantrowitz, Higher Education Expert
What's next
No official statement has been made by MOHELA on this recent news but we're sure there will be more to come. It's certainly nice to see student loan servicers being held accountable and we hope it happens more!
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