Democratic senators probe MOHELA after bogus delinquency notices hit borrowers

Democratic lawmakers, including Senators Elizabeth Warren, Jeff Merkley and Ed Markey, are seeking a comprehensive explanation from student-loan servicer MOHELA after it issued erroneous past-due notices that implied borrowers were close to default. They have asked the company to disclose the number of affected borrowers, the origin of the technical fault, and how quickly the error was communicated. The Education Department previously confirmed awareness of a limited issue and promised email notifications, yet some borrowers claim they never received corrections and experienced credit-score declines.

Critics argue the false alerts could have prompted unnecessary payments, potentially costing borrowers hundreds or thousands of dollars. MOHELA has faced prior scrutiny, including a 2023 Education Department sanction that withheld $7.2 million for delayed billing statements that marked 2.5 million borrowers as delinquent. Additional complaints have surfaced about billing inaccuracies since the Trump-era repayment reforms took effect on July 1.