In an age where student loans represent a substantial burden for millions, troubling accusations have surfaced against one of the leading student loan servicers. A former employee at Mohela, a prominent student loan company, has recently exposed some unsettling practices that seem designed to keep borrowers at bay.
Student Loan Service: The Art of Delay
According to an insider account, Mohela calls center employees were allegedly instructed to keep customers on hold for extended periods, apparently as a standard practice.
“It was frustrating because you’re instructed to follow the script very strictly,” the anonymous ex-employee shared, shedding light on the strictly regimented and seemingly uncaring operational tactics used by the servicer.
These workers were purportedly trained to delay customer inquiries, only transferring them to a knowledgeable representative after a significant wait time.
This method of handling calls could be seen as a part of a broader strategy referred to as ‘call deflection,’ a scheme that Senator Elizabeth Warren highlighted in a recent confrontation with the company’s CEO, Scott Giles.
In a letter dated March 18, Senator Warren invited Giles to address these concerns at a congressional hearing, pointing out the flaws in Mohela’s approach to managing borrower interactions during their transition back to repayment following the pandemic’s payment hiatus.
A Closer Look at Mohela’s Alleged Missteps
The allegations extend beyond mere operational inefficiencies. The former employee detailed a disturbing lack of competence within the higher echelons of Mohela and even implicated the U.S. Department of Education.
“We’re talking about hundreds of thousands of dollars for some of these people, and the majority of that being in interest that they don’t know where it came from,” the source lamented, illustrating the severe impact of these practices on borrowers.
These operational flaws reportedly contributed to significant delays for over 800,000 public service workers in receiving federal Public Service Loan Forgiveness, a benefit critical to those dedicating their careers to public service.
A top student loan company allegedly told staff to keep borrowers on hold https://t.co/UuuGR9z2le
— Demo83🟣🟪💜🪻🌸 (@DDemo83) May 14, 2024
Defense Amidst Accusations
Despite the heavy criticism, representatives from Mohela have defended their practices. Scott Buchanan, Executive Director of the Student Loan Servicing Alliance, argued at the April 10 hearing that the accusations of a call deflection strategy designed to harm borrowers were baseless.
Buchanan insisted that such strategies were not only implemented by Mohela but were a part of directives from the Federal Student Aid office itself. He also refuted claims that servicers were solely responsible for the backlog of Public Service Loan Forgiveness applications, pointing instead to inefficiencies within the Federal Student Aid office.
Facing the Consequences
The fallout from these practices has been significant. In October, the U.S. Department of Education penalized Mohela for failing to provide timely billing statements to 2.5 million borrowers, which in turn led to 800,000 borrowers becoming delinquent on their student loans.
Moreover, Mohela is now contending with two class-action lawsuits over its alleged mishandling of applications for the Public Service Loan Forgiveness program.
As the debate continues, the experiences shared by former employees and the scrutiny from lawmakers like Senator Warren underscore the critical need for transparency and reform in the student loan servicing sector.
Borrowers, often dealing with large sums and significant stress, deserve a system that supports rather than impedes their financial stability and success.
